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Impact of the COVID-19 pandemic on the relationship between uncertainty factors, investor’s behavioral biases and the stock market reaction of US Fintech companies

Author

Listed:
  • Oumayma GHARBI

  • Yousra TRICHILI

  • Mouna BOUJELBENE ABBES

Abstract

Object : This article investigate the impact of the COVID 19 on the relationship between uncertainty factors (Economic Policy Uncertainty, Equity Market Volatility–Infectious Diseases, Financial Stress) and investors’ behavioral biases (overconfidence, herding, mental accounting and loss aversion) with the US Fintech stock market abnormal returns. \n Methodology : we analyze this relationship by using Johensen’s cointegration test, Granger causality test and Ordinary least square method (OLS), for the period from July 20, 2016 to December 31, 2021. \n Results : The Empirical results indicated the presence of a long-run equilibrium relationship between all the studied variables, before and during the COVID-19 pandemic period. In fact, the obtained results indicated that the COVID-19 pandemic is a crucial source for resulting abnormal returns in the US Fintech market. Especially, during the COVID-19 pandemic, the Fintech market under-reacted to the common signal of financial stress. Moreover, behavioral biases, especially, overconfidence and herding, have a power positive effect on the abnormal reaction of US Fintech stock market, comparatively to the pre COVID-19 period. \n Originality : this work could be useful for policy makers and investors in the Fintech markets since it considers the behavioral biases and uncertainty factors on their investment strategies. \n Keywords : Fintech; COVID-19; uncertainty factors; investors’ behavioral biases, stock market reaction, Ordinary least squares (OLS) method.

Suggested Citation

  • Oumayma GHARBI & Yousra TRICHILI & Mouna BOUJELBENE ABBES, 2022. "Impact of the COVID-19 pandemic on the relationship between uncertainty factors, investor’s behavioral biases and the stock market reaction of US Fintech companies," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 13(1), pages 101-122, June.
    • Handle: RePEc:jaf:journl:v:13:y:2022:i:1:n:557
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    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • N8 - Economic History - - Micro-Business History
    • G3 - Financial Economics - - Corporate Finance and Governance

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