Uncertainty, Fear, and Liquidity (original) (raw)

Investors Behavior Under Growing Financial Market Uncertainty

SSRN: Household Finance eJournal, 2021

The author analyzes the statistics of words and phrases related to financial market trading practices in millions of volumes from Google's book collection and available at Google Ngram Viewer. In recent almost 30 years, as the analyzed data shows, the scholars and practitioners' interest in the specific market strategies and technique shifted toward those more automotive, aggressive, speculative, but less dependent on fundamental analysis, information and data processing, and investors' reasoning and research. This shift may indicate the increasing share of unsophisticated investors trying to cover the lack of experience and professional knowledge through extensive use of technology-supported strategies. In a long-run perspective, this may generate the growth of market instability, risks, and uncertainty.

Uncertainty and Liquidity

Journal of Monetary Economics, 1989

This paper studies a model where money is valued for the liquidity services it provides in the future. These liquidity services cannot be provided by any other asset. Changes in expectations of the value of future liquidity services affect the desired proportions of money and other assets in agentst portfolios, and, as a result, they change nominal interest rates and real stock prices.

Evolving capital markets in the era of economic uncertainty

International Review of Financial Analysis, 2016

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2012 A brief history of financial uncertainty

finance Concern is on the rise regarding financial uncertainty, its form and its nature. Is it merely exacerbated during a temporary crisis? Or, with the most unexpected phenomena always possible, is any attempt at forecasting doomed to be vain? It turns out both commonplace statements are missing the point: financial uncertainty is permanent, malleable, and resistant-it is by no means an abstraction that could be dismissed through means of calculation. Far from being constant, its structure varies throughout history: it depends on the given institutional frameworks that allow the flow and recording of economic information.

What Are Investors Afraid of? Finding the Big Bad Wolf

International Journal of Financial Studies

The aim of financial institutions and regulators is to find an effective way to measure the risk profile of different segments of investors. Both economists and psychologists developed several methodologies to elicit and assess individual risk attitude, but these are not perfect and show several drawbacks when used in practice. Thanks to a unique database of around 15,000 investors, this paper combines survey-based evidence with revealed preferences based upon observed asset allocation. This paper confirms some results known in the literature like the gender and age differences in risk-taking. Moreover, the behavioral clustering approach used for the analysis is useful in an inferential framework. The segments built starting from the questionnaire permit to “forecast” the individual risk attitude that is described by the individual choices in terms of asset allocation. Loss aversion per se is a relevant variable in explaining financial risk-taking.