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Uncertainty, Trust and Herding Behaviour

Author

Listed:
  • Ray Saadaoui Mallek
  • Mohamed Albaity
  • Philip Molyneux

    (University of Sharjah, United Arab Emirates)

Abstract

This study examined the impact of uncertainty and trust (in institutions) on the herding behaviour of investors in 32 OECD stock markets between 2003 and 2018. Overall, we found that uncertainty and trust weakened both investor’s herding and antiherding behaviour. Policymakers should focus on reducing the level of uncertainty, as well as improving institutional arrangements to mitigate the likelihood of price bubbles and potential crash risks.

Suggested Citation

  • Ray Saadaoui Mallek & Mohamed Albaity & Philip Molyneux, 2021. "Uncertainty, Trust and Herding Behaviour," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 11(2), pages 94-106.
    • Handle: RePEc:afj:journ3:v:11:y:2021:i:2:p:94-106
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin_v11_n2_a6
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    More about this item

    Keywords

    Uncertainty; Trust; Herding; Anti-herding;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • 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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