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How Do Investor’s Expectations and Emotions Drive Financial Asset Prices in Times of Crises and Uncertainty: The Analysis of Experts’ Opinions

Author

Listed:
  • Boulier, Jean-François
  • D’Hondt, Catherine

    (Université catholique de Louvain, LIDAM/LFIN, Belgium)

  • Jawadi, Fredj
  • Prat, Georges
  • Rozin, Philippe
  • Taffler, Richard

Abstract

This paper analyses the main views of several experts (academics and professionals) who met at the 2nd IEAP (Investor’s Emotions and Asset Price) meeting that was organized at the IAE Lille University School of Management on the 1st Februrary 2023. In particular, we analyze, first, the dynamics of financial asset prices as well as commodities prices during the last decade and we provide some projections about the future. Second, we discuss the role played by investors’ emotions as well as sentiment in driving financial asset prices and the contribution of fundamental factors while distinguishing financial markets from commodities and cryptocurrencies. Third, we document the dynamics of financial asset prices in the context of uncertainty, geopolitical tensions, post-COVID-19 period and high inflation. Finally, we provide some suggestions about the further extension of usual financial asset price models to include behavioral factors (emotions, sentiment) as well as uncertainty.

Suggested Citation

  • Boulier, Jean-François & D’Hondt, Catherine & Jawadi, Fredj & Prat, Georges & Rozin, Philippe & Taffler, Richard, 2024. "How Do Investor’s Expectations and Emotions Drive Financial Asset Prices in Times of Crises and Uncertainty: The Analysis of Experts’ Opinions," LIDAM Reprints LFIN 2024001, Université catholique de Louvain, Louvain Finance (LFIN).
    • Handle: RePEc:ajf:louvlr:2024001
    Note: In: Bankers, Markets and Investors, vol. 2023/4, nr. 175, p. 3-12
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    More about this item

    Keywords

    Emotions ; Expectations ; Financial asset prices ; Sentiment ; Uncertainty;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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