What Drives Excess Trading during the COVID-19 Pandemic?

Abstract

Manuscript type: Research paperResearch aims: This study aims to examine the underlying psychological and sociological factors that drive excess trading in the Malaysian stock market during a global health crisis such as the COVID-19 pandemic. Design/Methodology/Approach: A self-administered online questionnaire was collected from 271 individual investors to examine the association between big-five personality traits and trading frequency. Demographic information and investment behaviours of investors were also included in the study. The multinomial logit regression model was used to test the research hypotheses. Research findings: Findings show that personality traits such as openness to experience and agreeableness have a significant influence on trading frequency. Demographic factors and investment behaviours such as gender, household income level, years of investment experience and type of investor all have a significant positive relationship with trading frequency. Theoretical contribution/Originality: This study contributes to the current investor behaviour literature in Malaysia, which remains to be very limited, especially during a global health crisis. The study indicates that personality traits, demographic, socio-economic factors, and investment behaviours affect the trading frequency of Malaysian. Practitioner/Policy implication: This study offers insights for financial institutions and individual investors on the type of personality traits, demographic, socio-economic factors, and investment behaviours that drive excess trading during a global health crisis. The findings provide important contributions to avoid serious mistakes in investment analysis and trading profitable investment strategies, thus improving individual and team performance. Research limitation/Implications: Some results are not significant and may be limited due to the small sample size used in this study. Future research could recruit more retail investors to confirm the significance level of those variables. Besides, the study can be conducted after the COVID-19 pandemic to explore whether there is any significant difference in the variables during and after the global health crisis.