Herd Behavior in Asian Stock Markets: A Meta-Analysis

Abstract

The thesis examines herd behavior in Asian stock markets through a meta-analytical approach to understand its manifestation during financial crises compared to normal conditions. The focus on Asian markets is relevant due to their significant growth and diverse economic and regulatory landscapes.

The study delves into herd behavior, defined as investors following others' trades rather than using independent analysis. This behavior often leads to market inefficiencies and contradicts the Efficient Market Hypothesis. It integrates behavioral finance theories to provide a comprehensive understanding of market dynamics.

A systematic meta-analysis was conducted, rigorously selecting empirical studies on Asian markets to ensure a robust analysis. The findings reveal that herd behavior is widespread across all Asian stock markets, though its intensity varies among different exchanges and is influenced by local conditions and regulations. Notably, herd behavior intensifies during periods of high volatility, such as financial crises, driven by heightened uncertainty and risk.

The thesis highlights the complexity of financial markets and challenges traditional theories by demonstrating the significant impact of herd behavior. It advocates for nuanced financial regulation and informed investor strategies to enhance market stability and efficiency. The insights could assist in developing policies to mitigate risks associated with herd behavior and improve investment decisions, especially during market stress.

Overall, the thesis enriches the understanding of market dynamics in Asian contexts, offering valuable insights for investors, policymakers, and academics focused on financial market behavior and regulation.