Herding Behaviour in Financial Markets
A Literature Review
Bibliographic Data
| ID | 22198032 |
|---|---|
| Authors | Sk Mujibar Rahaman (0000-0001-5629-3293, Department of Commerce, corresponding author) |
| Year | 2024 |
| Volume | 5 |
| Issue | 6 |
| Publication date | 2024-06-30 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | ShodhKosh: Journal of Visual and Performing Arts (JOURNAL) |
| Journal identifiers | ISSN: 2582-7472 • E-ISSN: 2582-7472 |
| Publisher | Granthaalayah Publications and Printers (PUBLISHER • IN) |
| DOI | 10.29121/shodhkosh.v5.i6.2024.4819 |
| OpenAlex | W4409339179 |
| Language | EN |
| References cited | 27 |
In financial markets, the expression "herding behaviour" portrays investors' affinity to mimic the exercises of others, which habitually brings about them venturing into risky investment decisions without cautiously gauging the important risk-reward ratio or relevant information. This phenomenon can make financial frameworks more unsound, enhance market volatility, and make the general economy more volatile. This review of the literature offers an exhaustive analysis of herding behaviour, underlining its monetary, social, and psychological causes as well as its effects on market outcomes. The review assesses the social components and psychological biases leading to herding affinities among institutional and individual investors by joining the empirical evidences from different studies. The models stowed away this idiosyncrasy are figured out in this review through the discussion of theoretical frameworks like informational cascades, social learning models, and behavioural finance theories. This review also attempts to unveil the unfavourable outcomes of herding behaviour, for instance, the distortion of market efficiency, the escalation of market volatility, and the formation of speculative bubbles. This article tries to give a comprehensive information on herding behaviour, its commitment in financial market disappointments, and reasonable methodology for mitigating its debilitating consequences on market efficiency through an analysis of empirical evidences and theoretical frameworks
Business · Economics · Financial economics · Financial market · Geography · Herding · Complex Systems and Time Series Analysis · Economic theories and models · Financial Markets and Investment Strategies · Finance
| Citation velocity | historical |
|---|---|
| Highly cited | No |