Countercyclical Social Responsibility

47 Pages Posted: 1 Feb 2021 Last revised: 4 Apr 2022

See all articles by Ola Mahmoud

Ola Mahmoud

University of St. Gallen; University of California at Berkeley; Swiss Finance Institute

Julia Meyer

University of Zurich - Department of Banking and Finance; ZHAW School of Management and Law

Date Written: July 14, 2021


Are market agents more or less socially responsible in times of heightened uncertainty? Using the initial wave of the COVID-19 pandemic as a natural experiment, we provide evidence for an increase in social responsibility in the financial market and propose risk preferences as a behavioral driver. Two experiments conducted before and during the pandemic suggest an increase in the average allocation to a standard public good; a shift towards socially responsible investment decisions; and a significant association between risk aversion and social responsibility. Financial market proxies for investor sentiment for social responsibility corroborate our evidence for countercyclical social responsibility.

Keywords: countercyclical social responsibility, socially responsible markets, pandemic, risk aversion, ambiguity aversion

JEL Classification: G41, G11, D81, D91, M14

Suggested Citation

Mahmoud, Ola and Meyer, Julia, Countercyclical Social Responsibility (July 14, 2021). Available at SSRN: or

Ola Mahmoud (Contact Author)

University of St. Gallen ( email )

Institute of Economics
Varnbüelstrasse 19
St Gallen, St. Gallen 9000

University of California at Berkeley ( email )

Consortium for Data Analytics in Risk
Evans Hall
Berkeley, CA 8032
United States

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4

Julia Meyer

University of Zurich - Department of Banking and Finance ( email )

Plattenstrasse 30/32
Zürich, 8032

ZHAW School of Management and Law ( email )

St.-Georgen-Platz 2
Winterthur, 8401

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