Herding Behavior in Stock Market of Bangladesh: A Case of Behavioural Finance

Published Online: 22 June, 2023 || Published in Print: 30 June, 2023

Authors

  • Faysal Ahmad Khan* Bangladesh Institute of Capital Market, Dhaka, Bangladesh Author
  • Mahmood Osman Imam Department of Finance, Faculty of Business Studies, University of Dhaka Author

DOI:

https://doi.org/10.54728/JFMG-202209-00064

Keywords:

Behavioral Finance; Herd behavior; Equity return dispersion; Bangladesh stock market.

Abstract

The study investigates herding behavior in the stock market of Bangladesh using a measure called Cross-Sectional Absolute Deviation (CSAD). The findings suggest that herding behavior does exist in the stock market of Bangladesh, based on the analysis of daily data from 169 stocks listed on the Dhaka Stock Exchange (DSE). Furthermore, the study indicates the presence of potential asymmetries in herd behavior concerning market returns and trading volume. The herding behavior, as observed in the Bangladeshi stocks, exhibits asymmetric tendencies, implying that the strength of herding varies depending on different market conditions. Specifically, the results show that herding behavior is more pronounced when the market trading volume is high. In other words, when there is an increased trading activity in the market, the tendency for investors to engage in herding behavior becomes stronger.

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Published

2023-06-22

Issue

Vol. 2 No. 1

Section

Articles

How to Cite

Faysal Ahmad Khan*, & Mahmood Osman Imam. (2023). Herding Behavior in Stock Market of Bangladesh: A Case of Behavioural Finance: Published Online: 22 June, 2023 || Published in Print: 30 June, 2023. Journal of Financial Markets and Governance, 2(1), 01-13. https://doi.org/10.54728/JFMG-202209-00064