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Herding in Crisis: Financial Contagion and Collective Panic During Economic Turmoil

Herding in Crisis: Financial Contagion and Collective Panic During Economic Turmoil
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Author(s): Xiong Xu (Chengdu International Studies University, China)
Copyright: 2025
Pages: 22
Source title: Psychological Drivers of Herding and Market Overreaction
Source Author(s)/Editor(s): Ooi Kok Loang (University of Malaya, Malaysia)
DOI: 10.4018/979-8-3693-7827-4.ch005

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Abstract

This study investigates the impact of media coverage intensity, market volatility, investor sentiment, institutional investor activity, and regulatory announcements on market stability, incorporating the moderating effect of social network influence and the mediating effect of financial contagion. Using panel data regression and structural equation modeling, the research aims to provide a nuanced understanding of the dynamics influencing market stability. The findings reveal that media coverage intensity, investor sentiment, and regulatory announcements positively impact market stability, while market volatility negatively impacts it. Institutional investor activity also contributes positively to market stability. Furthermore, social network influence moderates these relationships, either amplifying or mitigating the impacts, and financial contagion mediates the effects, weakening the positive impacts.

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