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The impact of social cohesion on stock market resilience: Evidence from COVID-19
Journal of Behavioral and Experimental Finance ; : 100749, 2022.
Article in English | ScienceDirect | ID: covidwho-2004193
ABSTRACT
We investigate whether cultural tightness, the strength of social norms, provides stock markets with resilience to external shocks. There is tension in forming expectations regarding this. One reasoning, particularly following from cultural archaeology literature, is that societies best cope with challenges, disaster recovery, and loss when they are culturally comfortable with transformation, with cultural tightness arguably opposed to cultural change. On the other hand, alternative reasoning is that tightness allows for societal cohesion that supports optimism to function in a unified way to confront challenge. We test whether markets were supported by cultural tightness during COVID-19 adversity. In accordance with the latter view, we evidence that stock market volatilities during COVID-19 were significantly lower in countries with ‘tighter’ cultures.
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Full text: Available Collection: Databases of international organizations Database: ScienceDirect Type of study: Experimental Studies Language: English Journal: Journal of Behavioral and Experimental Finance Year: 2022 Document Type: Article

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Full text: Available Collection: Databases of international organizations Database: ScienceDirect Type of study: Experimental Studies Language: English Journal: Journal of Behavioral and Experimental Finance Year: 2022 Document Type: Article