HERDING DURING COVID-19 PANDEMIC: AN EMPIRICAL STUDY IN VIETNAMESE STOCK MARKET

Abstract

This paper investigates herd behavior in the Vietnam stock market under the impacts of the COVID-19 pandemic. Using Chang et al.’s (2000) method on two sets of daily and weekly trading data ranging from January 2018 to December 2021, we provide evidence about the presence of herd behavior during the global health crisis but not in the period prior to the outbreak of COVID-19. In addition, the regression analysis of a modified model implies that the tendency of herding among investors in the Vietnam stock market became more prevalent as the pandemic became more severe and the government measures to mitigate the pandemic turned out to be more stringent. These findings suggest that Vietnamese regulators may help to stop or mitigate the impact of any potential stock market crashes and that new investors need to acquire more knowledge about the market and skills for investing.