Flattening the Illiquidity Curve: Retail Trading During the COVID-19 Lockdown
By Gideon Ozik, Ronnie Sadka, Siyi Shen. Journal of Financial and Quantitative Analysis, 2020
123 citations recorded by the source corpus.
Abstract This article studies the impact of retail investors on stock liquidity during the COVID-19 pandemic lockdown in spring 2020. Retail trading exhibits a sharp increase, especially among stocks with high COVID-19–related media coverage. Retail trading attenuated the rise in illiquidity by roughly 40% but less so for high-media-attention stocks. Causality is addressed using the staggered implementation of the stay-at-home advisory across U.S. states. The results highlight that ample free time and access to financial markets facilitated by fintech innovations to trading platforms are significant determinants of retail-investor stock market participation.
Subfields: Economics and Econometrics, Finance
View Paper: https://www.semanticscholar.org/paper/7dd3c9f56ecdde5dbd640c412e10b85be6d5d4d2
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In Economics and Econometrics
Citations in the corpus
- Firm-Level Exposure to Epidemic Diseases: Covid-19, SARS, and H1N1 (2020, unknown): “…(modeling the pandemic as a large negative shock to the utility of consumption).4 In finance, several studies highlight the credit market access and liquidity consequences of the Covid-19 pandemic (Au et al. (2020); Ferrando (2020); Kargar et al. (2020); Ma et al. (2020); Ozik et al. (2020)).”
- ESG Ratings and Stock Performance during the COVID-19 Crisis (2021, background): “[58] argue that retail investors could incrementally stabilize financial markets, and Pástor and Vorsatz [59] find that passive benchmarks outperformed actively managed funds during the market crash.”