Financial Behavior during COVID-19: Cognitive Errors That Can Define Financial Future

Abstract

Purpose: The purpose of this study is to determine the economic effects caused by the crisis impact of the COVID-19 pandemic. Methodology: We explored various kinds of literature from various journals to find out the level of trust and financial behavior of the public during the COVID-19 pandemic. Results and findings: The phenomena that occurred during the crisis due to the COVID-19 pandemic, such as excessive volatility and the confidence of unaffected financial institutions, cannot be explained through the traditional market paradigm. In this paper, we explore this phenomenon from a behavioral finance perspective and discuss some relevant cognitive errors and biases during and after the crisis due to the COVID-19 pandemic. Limitation: The study explains by exploring the phenomenon from the viewpoint of financial behavior and discussing some of the relevant cognitive errors during and after the crisis. We only look at each phenomenon from a psychological point of view and consider its relevance to financial institutions and markets as well as the financial crisis due to the COVID-19 Pandemic.