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Investors’ risk attitudes in the pandemic and the stock market: new evidence based on internet searches

Summary:
BIS Bulletin  |  No 25  |  26 June 2020 by  Marlene Amstad, Giulio Cornelli, Leonardo Gambacorta and Dora Xia PDF full text (701kb)  |  9 pages Key takeaways The sharp drop and subsequent rebound in global stock markets in the current pandemic focuses attention on changes in investors' risk attitudes.  A new Covid-19 risk attitude (CRA) index for 61 markets, based on internet searches in Google and Baidu, does a good job at capturing investors' attitudes toward pandemic-related risks.  Stock markets are more sensitive to changes in the

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BIS Bulletin  |  No 25  | 
26 June 2020
PDF full text
 (701kb)
 |  9 pages

Key takeaways

  • The sharp drop and subsequent rebound in global stock markets in the current pandemic focuses attention on changes in investors' risk attitudes. 
  • A new Covid-19 risk attitude (CRA) index for 61 markets, based on internet searches in Google and Baidu, does a good job at capturing investors' attitudes toward pandemic-related risks. 
  • Stock markets are more sensitive to changes in the CRA index in more financially developed economies. Stock markets are less sensitive in jurisdictions that have restricted mobility less and that have enacted other containment measures against the pandemic.

Online appendix 
 

International Settlement
The Bank for International Settlements (BIS) is an international company limited by shares owned by central banks which "fosters international monetary and financial cooperation and serves as a bank for central banks". The BIS carries out its work through subcommittees, the secretariats it hosts and through an annual general meeting of all member banks. It also provides banking services, but only to central banks and other international organizations. It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.

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