{"title":"Infectious disease outbreaks and the disposition effect of mutual fund investors","authors":"Xiaoxiao Wang , Xueyong Zhang","doi":"10.1016/j.jbankfin.2024.107344","DOIUrl":null,"url":null,"abstract":"<div><div>This study investigates the potential impact of the 2003 severe acute respiratory syndrome (SARS) epidemic on cognitive biases in capital markets, focusing on individual mutual fund investors’ trading behavior in the post-SARS era. Using a proprietary data set obtained from a large Chinese mutual fund family comprising comprehensive trading information, this research finds that individuals in areas experiencing severe SARS cases exhibit a stronger disposition effect after the end of the epidemic. It further indicates that unsophisticated investors are more vulnerable to the disposition effect and this mood regulation–induced behavior is irrational and related to behavioral biases, ultimately worsening investors’ circumstances. These results hold across a wide range of robustness checks.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"171 ","pages":"Article 107344"},"PeriodicalIF":3.6000,"publicationDate":"2025-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Banking & Finance","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0378426624002589","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
This study investigates the potential impact of the 2003 severe acute respiratory syndrome (SARS) epidemic on cognitive biases in capital markets, focusing on individual mutual fund investors’ trading behavior in the post-SARS era. Using a proprietary data set obtained from a large Chinese mutual fund family comprising comprehensive trading information, this research finds that individuals in areas experiencing severe SARS cases exhibit a stronger disposition effect after the end of the epidemic. It further indicates that unsophisticated investors are more vulnerable to the disposition effect and this mood regulation–induced behavior is irrational and related to behavioral biases, ultimately worsening investors’ circumstances. These results hold across a wide range of robustness checks.
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The Journal of Banking and Finance (JBF) publishes theoretical and empirical research papers spanning all the major research fields in finance and banking. The aim of the Journal of Banking and Finance is to provide an outlet for the increasing flow of scholarly research concerning financial institutions and the money and capital markets within which they function. The Journal''s emphasis is on theoretical developments and their implementation, empirical, applied, and policy-oriented research in banking and other domestic and international financial institutions and markets. The Journal''s purpose is to improve communications between, and within, the academic and other research communities and policymakers and operational decision makers at financial institutions - private and public, national and international, and their regulators. The Journal is one of the largest Finance journals, with approximately 1500 new submissions per year, mainly in the following areas: Asset Management; Asset Pricing; Banking (Efficiency, Regulation, Risk Management, Solvency); Behavioural Finance; Capital Structure; Corporate Finance; Corporate Governance; Derivative Pricing and Hedging; Distribution Forecasting with Financial Applications; Entrepreneurial Finance; Empirical Finance; Financial Economics; Financial Markets (Alternative, Bonds, Currency, Commodity, Derivatives, Equity, Energy, Real Estate); FinTech; Fund Management; General Equilibrium Models; High-Frequency Trading; Intermediation; International Finance; Hedge Funds; Investments; Liquidity; Market Efficiency; Market Microstructure; Mergers and Acquisitions; Networks; Performance Analysis; Political Risk; Portfolio Optimization; Regulation of Financial Markets and Institutions; Risk Management and Analysis; Systemic Risk; Term Structure Models; Venture Capital.
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