Behavioral finance and COVID-19

Abstract

According to Ram, characterized by a market crash and excessive stock price volatility, the COVID-19 pandemic had striking financial impacts. Some of the phenomena that occurred through the catastrophe, like the extreme volatility and unshakable confidence of fiscal associations, are not sufficiently explicated by the conventional financial paradigm. In addition to the effect of COVID-19 on financial markets of the globe, this paper explores the decisions and actions of investors and financial institutions from a behavioral finance perspective. Relevant during and after the crisis, various cognitive biases and errors are also discussed. The current paper is a literature review of the existing research on behavioral finance's effect on the COVID-19 epidemic. A cautious evaluation of these 13 articles divulged no material pertinent to behavioral finance. The remaining 27 articles were incorporated in this analysis. We explore these phenomena and evaluate their significance to financial markets and institutions and the global crisis stimulated by COVID-19.