Noura Metawa, Saad Metawa, Maha Metawea and Ahmed El-Gayar
This paper deeply investigates the herd behavior of the Egyptian mutual funds under changing and different conditions of the market pre- and post-events and compares the impact of…
Abstract
Purpose
This paper deeply investigates the herd behavior of the Egyptian mutual funds under changing and different conditions of the market pre- and post-events and compares the impact of asymmetric risk conditions on the herding behavior of the Egyptian mutual funds in both up and down markets.
Design/methodology/approach
We test for the existence of herding for the whole period from 2003 to 2022, as well as for the pre-and post-different Egyptian uprising periods. We employ two well-known models, namely the cross-sectional standard deviation (CSSD) and cross-sectional absolute deviation (CSAD) models. Additionally, we use the quantile regression approach.
Findings
We find that the behavior of mutual funds does not change following the different political and social events. For the whole period, we find evidence of herding behavior using only the model of CSAD in down-market conditions. We generalize our finding to be evidence of the existence herding behavior in different quantiles, under only the down market in specific points’ pre, post or both given events throughout the whole series. Conversely, during the upper market, we show a full absence of herding behavior considering all different quantiles. When the market is down, managers are afraid of the condition of uncertainty, neglecting their own private information, avoid acting independently and consequently, following other mutual funds. When the market is up, managers become rational and act fully independent.
Research limitations/implications
Future research should delve deeper into the drivers of herding behavior, assess its longer-term effects, develop risk management strategies and consider regulatory measures to mitigate the potential negative impact on mutual fund performance and investor outcomes.
Practical implications
The study reveals that the behavior of mutual funds remains consistent despite various political and social events, suggesting a degree of resilience in their investment strategies. The research uncovers evidence of herding behavior in both high and low quantiles, but exclusively in down markets. In such conditions of market decline, fund managers appear to forsake their private information, exhibiting a tendency to follow the crowd rather than acting independently.
Social implications
The study reveals that the behavior of mutual funds remains consistent despite various political and social events, suggesting a degree of resilience in their investment strategies. The research uncovers evidence of herding behavior in both high and low quantiles, but exclusively in down markets. In such conditions of market decline, fund managers appear to forsake their private information, exhibiting a tendency to follow the crowd rather than acting independently. Future research should delve deeper into the drivers of herding behavior, assess its longer-term effects, develop risk management strategies and consider regulatory measures to mitigate the potential negative impact on mutual fund performance and investor outcomes.
Originality/value
The paper investigates the herd behavior of the Egyptian mutual funds under asymmetric risk conditions, the study follows the spectrum of the herding behavior analysis and Egyptian mutual funds, extending the research with imperial analysis of market conditions pre- and post-events including currency floating, COVID-19 and political elections. The study gives substantial recommendations for policymakers and investors in emerging markets mutual funds.
Details
Keywords
Noura Metawa, M. Kabir Hassan, Saad Metawa and M. Faisal Safa
This paper aims to investigate the relationship between investors’ demographic characteristics (age, gender, education level and experience) and their investment decisions through…
Abstract
Purpose
This paper aims to investigate the relationship between investors’ demographic characteristics (age, gender, education level and experience) and their investment decisions through behavioral factors (sentiment, overconfidence, overreaction and underreaction and herd behavior) as mediator variables in the Egyptian stock market.
Design/methodology/approach
This paper collects data from a structured questionnaire survey carried out among 384 local Egyptian, foreign, institutional and individual investors. This paper used a partial multiple regression method to analyze the effect of investors’ demographic characteristics on investment decisions through behavioral factors as the mediator variable.
Findings
Investor sentiment, overreaction and underreaction, overconfidence and herd behavior significantly affect investment decisions. Also, age, gender and the level of education have significant positive effects on investment decisions by investors. Experience does not play a significant role in investment decisions, but as investors gain experience, they tend to overlook the emotional factors.
Practical implications
The findings of this paper would help to understand common behavioral patterns of investors and indicate a path toward the growth of the Egyptian stock market.
Originality/value
There is a lack of research in behavioral finance covering Middle East and North African markets. This paper attempts to fulfill the gap by analyzing behavioral factors in the Egyptian market.
Details
Keywords
Noura Metawa, Mohamed Elhoseny and Maha Mutawea
This paper aims to provide insights regarding the state of the art of digital transformation for small- and medium-sized enterprises (SMEs) in Egypt and propose avenues for future…
Abstract
Purpose
This paper aims to provide insights regarding the state of the art of digital transformation for small- and medium-sized enterprises (SMEs) in Egypt and propose avenues for future research.
Design/methodology/approach
A proposed framework for the digitization process in SMEs is developed by providing three layers of working steps toward full automation. The paper also provides an extensive analysis of the main requirements for improving the existing traditional information systems' performance in these enterprises. The challenges of digital transformation and the future research direction are discussed as well.
Findings
This paper provided an overview of the importance of digital transformation in real-life applications. The role of the information systems in building a digitalized information processing environment is covered as well. Also, a framework for the shifting process from the traditional approaches to the digitalized systems is proposed. Besides, the paper overviewed the future research directions related to digital transformation in SMEs, especially in Egypt. These research directions are related to technical challenges during the digital transformation process, such as cybersecurity, big data analytics and multimodality data.
Originality/value
Despite the significant governmental and institutions' steps toward full automation and digital transformation, the traditional information systems, infrastructures, and unequipped employees make the digitizing process on-the-fly an open challenge. A technology shift that is not supported by a similar cultural change threatens digital business initiatives and increases the risk of their failure. This paper aims to provide insights regarding the state of the art of digital transformation for SMEs in Egypt and propose avenues for future research.