Pub Date : 2022-03-02DOI: 10.1108/rbf-02-2021-0018
I. Yousaf, Jassem Alokla
PurposeThis study examines herding in Islamic bank equity markets under various market conditions (up/down, high/low trading and high/low volatility) and during events such as Organization of the Petroleum Exporting Countries (OPEC) meeting days, Ramadan, the Gulf Cooperation Council (GCC) crisis of 2017 and the COVID-19 pandemic. The authors also look at the impact of rising and falling oil prices on herding behaviour.Design/methodology/approachThis study uses the model of Chang et al. (2000) to estimate herding behaviour in the Islamic bank markets.FindingsFirst, the authors estimate herding at the GCC region level, and the results reveal an absence of herding under all market conditions and during all the events considered, except for the GCC crisis of 2017. Second, the authors investigate herding in four Gulf countries (Saudi Arabia, United Arab Emirates [UAE], Qatar and Kuwait) separately and find that herding is evident in all these countries during various market conditions. During Ramadan, herding appears in the Saudi Arabia and Kuwait Islamic bank equity markets. Herding is not prevalent during OPEC meeting days in any of the markets, whereas herding is evident in Saudi Arabia, UAE and Kuwait Islamic bank equity markets during the GCC crisis of 2017 and the COVID-19 pandemic. Lastly, the rising and falling oil prices do not influence herding at either GCC region or country level.Practical implicationsFrom the practitioner's perspective, this study provides useful insights for investors in Islamic banks and policymakers, in terms of asset pricing, portfolio diversification, trading strategies and market stability.Originality/valueMany studies explore herding in the equity markets of Muslim majority countries, but not specifically in the Islamic bank market. This study fills this literature gap by comprehensively examining herding in Islamic bank equity markets under various market conditions (up/down, high/low trading and high/low volatility) and during events, such as OPEC meeting days, Ramadan, the GCC crisis of 2017 and the COVID-19 pandemic.
{"title":"Herding behaviour in the Islamic bank market: evidence from the Gulf region","authors":"I. Yousaf, Jassem Alokla","doi":"10.1108/rbf-02-2021-0018","DOIUrl":"https://doi.org/10.1108/rbf-02-2021-0018","url":null,"abstract":"PurposeThis study examines herding in Islamic bank equity markets under various market conditions (up/down, high/low trading and high/low volatility) and during events such as Organization of the Petroleum Exporting Countries (OPEC) meeting days, Ramadan, the Gulf Cooperation Council (GCC) crisis of 2017 and the COVID-19 pandemic. The authors also look at the impact of rising and falling oil prices on herding behaviour.Design/methodology/approachThis study uses the model of Chang et al. (2000) to estimate herding behaviour in the Islamic bank markets.FindingsFirst, the authors estimate herding at the GCC region level, and the results reveal an absence of herding under all market conditions and during all the events considered, except for the GCC crisis of 2017. Second, the authors investigate herding in four Gulf countries (Saudi Arabia, United Arab Emirates [UAE], Qatar and Kuwait) separately and find that herding is evident in all these countries during various market conditions. During Ramadan, herding appears in the Saudi Arabia and Kuwait Islamic bank equity markets. Herding is not prevalent during OPEC meeting days in any of the markets, whereas herding is evident in Saudi Arabia, UAE and Kuwait Islamic bank equity markets during the GCC crisis of 2017 and the COVID-19 pandemic. Lastly, the rising and falling oil prices do not influence herding at either GCC region or country level.Practical implicationsFrom the practitioner's perspective, this study provides useful insights for investors in Islamic banks and policymakers, in terms of asset pricing, portfolio diversification, trading strategies and market stability.Originality/valueMany studies explore herding in the equity markets of Muslim majority countries, but not specifically in the Islamic bank market. This study fills this literature gap by comprehensively examining herding in Islamic bank equity markets under various market conditions (up/down, high/low trading and high/low volatility) and during events, such as OPEC meeting days, Ramadan, the GCC crisis of 2017 and the COVID-19 pandemic.","PeriodicalId":44559,"journal":{"name":"Review of Behavioral Finance","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2022-03-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76290217","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-03-01DOI: 10.1108/rbf-09-2021-0171
Christi R. Wann, Beverly K. Brockman, Christopher M. Brockman
PurposeThe purpose of this paper is to study the effect of credit record overconfidence on the use of alternative financial services (AFSs).Design/methodology/approachUsing data from the 2018 National Financial Capability Study (NFCS), the authors estimate logistic regressions on the use of at least one AFS by adding a credit record confidence variable that captures deviations between self-assessments of credit record management and the number of reported behaviors that would negatively affect aspects of a Fair Isaac Corporation (FICO) score.FindingsThe authors find that respondents with credit record overconfidence have over two times higher odds (123.9%) of using AFS than the odds of respondents with financial knowledge overconfidence (46.8%), relative to their reference categories. When compared directly, those with only credit record overconfidence have 32.6% higher odds of using AFS than those with only financial knowledge overconfidence.Practical implicationsThe results provide implications for education programs, not only for vulnerable groups at higher risk for AFS use but also for those with cognitive biases, such as credit record overconfidence. Potential solutions include personal financial education that includes debiasing and behavioral techniques for overconfidence.Originality/valueThis paper studies, for the first time, the effect of deviations between actual and perceived credit record management on AFS use.
本文的目的是研究信用记录过度自信对替代金融服务(AFSs)使用的影响。使用2018年国家财务能力研究(NFCS)的数据,作者通过添加信用记录信心变量来估计至少使用一种AFS的逻辑回归,该变量捕获信用记录管理自我评估与报告的行为数量之间的偏差,这些行为会对Fair Isaac Corporation (FICO)评分产生负面影响。研究结果作者发现,相对于参考类别,信用记录过度自信的受访者使用AFS的几率(123.9%)是金融知识过度自信的受访者(46.8%)的两倍多。当直接比较时,那些只有信用记录过度自信的人比那些只有金融知识过度自信的人使用AFS的几率高32.6%。实际意义该结果不仅对使用AFS风险较高的弱势群体,而且对那些有认知偏见的人,如信用记录过度自信,提供了教育计划的启示。潜在的解决方案包括个人理财教育,包括消除偏见和过度自信的行为技巧。原创性/价值本文首次研究了实际信用记录管理与感知信用记录管理之间的偏差对AFS使用的影响。
{"title":"Credit record overconfidence and alternative financial service use","authors":"Christi R. Wann, Beverly K. Brockman, Christopher M. Brockman","doi":"10.1108/rbf-09-2021-0171","DOIUrl":"https://doi.org/10.1108/rbf-09-2021-0171","url":null,"abstract":"PurposeThe purpose of this paper is to study the effect of credit record overconfidence on the use of alternative financial services (AFSs).Design/methodology/approachUsing data from the 2018 National Financial Capability Study (NFCS), the authors estimate logistic regressions on the use of at least one AFS by adding a credit record confidence variable that captures deviations between self-assessments of credit record management and the number of reported behaviors that would negatively affect aspects of a Fair Isaac Corporation (FICO) score.FindingsThe authors find that respondents with credit record overconfidence have over two times higher odds (123.9%) of using AFS than the odds of respondents with financial knowledge overconfidence (46.8%), relative to their reference categories. When compared directly, those with only credit record overconfidence have 32.6% higher odds of using AFS than those with only financial knowledge overconfidence.Practical implicationsThe results provide implications for education programs, not only for vulnerable groups at higher risk for AFS use but also for those with cognitive biases, such as credit record overconfidence. Potential solutions include personal financial education that includes debiasing and behavioral techniques for overconfidence.Originality/valueThis paper studies, for the first time, the effect of deviations between actual and perceived credit record management on AFS use.","PeriodicalId":44559,"journal":{"name":"Review of Behavioral Finance","volume":null,"pages":null},"PeriodicalIF":2.0,"publicationDate":"2022-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88176867","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}