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Article
Publication date: 21 December 2021

Yasser Alhenawi and Atefeh Yazdanparast

The authors draw on psychological reactance theory, collective mental programming, psychological profiles and financial vulnerability experiences to assess the possibility that…

644

Abstract

Purpose

The authors draw on psychological reactance theory, collective mental programming, psychological profiles and financial vulnerability experiences to assess the possibility that the pandemic may induce transformative changes in households' behavioral intentions related to financial decisions after the pandemic is over.

Design/methodology/approach

Using a unique survey data drawn from four different countries located in North America, Europe, Africa and Latin America, the authors show that the stressful conditions that accompanied the pandemic have instigated a state of financial vulnerability and stimulated instinctual defensive mechanisms among consumers.

Findings

The study results indicate that households have intentions to make defensive decisions in spending, consumption, planning and investment. Furthermore, the authors report evidence that personal psychological heterogeneity (as an individual factor) and collective mental programming (as a cultural factor) play a significant role in shaping households' postpandemic financial intentions.

Research limitations/implications

The study findings carry important practical implications. For financial institutions, marketers and financial advisors, the authors’ work implies that individual and collective factors affect people's perception and behavioral intentions in response to financial adversities. For social planners and legislators, the authors’ work shows that they should expect not only short-term but also long-term reactions to the COVID-19 pandemic.

Originality/value

Most research on the impact of COVID-19 pandemic on households' financial behavior focuses on transitional adjustments made during the pandemic, and little emphasis has been placed on potential postpandemic adjustments. The authors contend that it would be a mistake to analyze the pandemic-induced crisis as a temporary financial hardship.

Details

International Journal of Bank Marketing, vol. 40 no. 3
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 28 February 2022

Yasser Alhenawi, Khaled Elkhal and Zhe Li

This paper aims to use the Covid-19 pandemic situation to conduct an experiment-like study that focuses on industry reactions under stress. Particularly, this study analyzes stock…

391

Abstract

Purpose

This paper aims to use the Covid-19 pandemic situation to conduct an experiment-like study that focuses on industry reactions under stress. Particularly, this study analyzes stock response to eight pandemic related news in 2020 across different industries. This study also investigates the role that the market risk, beta, plays in such stock reactions.

Design/methodology/approach

This study computes the cumulative abnormal returns (CAR) around COVID-19 events using adjusted daily stock returns of all stocks in the S&P 500 index between January 2, 2020 and December 31, 2020. This study also sorts all stocks by beta into quintiles and measures the CAR [0, +3] for each quintile around each event date.

Findings

This study finds that low beta portfolios exhibit greater abnormal returns (in absolute value) than high beta portfolios during down markets while high beta portfolios exhibit greater abnormal returns (in absolute values) when the market starts to recover. However, this study finds that beta does not seem to explain the abnormal returns reported in various industries during times of negative sentiment. During times of positive sentiment, both the beta effect and industry effect are present.

Originality/value

Extant literature almost unanimously concurs that the COVID-19 pandemic has brought about negative stock reactions to financial markets across the globe. Nevertheless, three interrelated issues have not been explored: market reactions during the subsequent recovery, industry heterogeneity and individual stocks’ risk profile. The study addresses these matters.

Details

Studies in Economics and Finance, vol. 39 no. 5
Type: Research Article
ISSN: 1086-7376

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