Proceedings of The 9th International Conference on Opportunities and Challenges in Management, Economics and Accounting
Individual Investors and the Financial Crisis
Jarl Kallberg,Crocker H. Liu,Ran Shao & Na Wang
This paper studies the trading behavior of individual Chinese investors before and during the recent nancial crisis. We have three major ndings: (i) individual investors did not withdraw their capital from the equity market during the crisis; instead, they reduced investment more in the pre-crisis period, especially following portfolio gains; (ii) the net ow decisions were in uenced by past positive returns, but not by past losses; the net ow patterns were consistent with the disposition e⁄ect, which was even stronger during the crisis; (iii) during the crisis, investors revised their portfolios to hold relatively safer and more liquid stocks, and this pattern is more evident for small investors.
keywords: individual investors, nancial crisis, net ows, disposition e⁄ect, portfolio holdings.