Central Banks as Crowd Leaders in Times of Crisis: A Crowd-Psychology Analysis of Mario Draghi's 26 July 2012 Speech[Les Banques centrales comme meneuses durant les crises financières: Une analyse en termes de psychologie des foules du discours de Mario Draghi du 26 juillet 2012]

This article stands at the crossroads of economics, crowd psychology, behavioral finance, and management studies. It offers a qualitative analysis of Mario Draghi's speech of 26 July 2012 at the Global Investment Conference in London, using the analytical framework of crowd psychology and its archetypal leader. My central hypothesis is that, in times of crisis, financial markets behave like Le Bon's psychological crowd. Le Bon's theory indeed corroborates the salient mechanisms identified by behavioral finance, such as information cascades, emotional contagion, and herding. This article makes several contributions that I hope will be useful both to the literature on central bank communication in times of crisis and to the oratory practice of central bankers. First, I establish a typology of an effective speech based on the economic research on central bank crisis communication. I then construct the typology of the leader's psychology and means of action using insights from crowd psychology. I subsequently apply this typology, which is more detailed and goes further than the economic criteria, to analyze Mr. Draghi's speech, and to conclude on its effectiveness in create news and reduce noise.