Economics, Econometrics and Finance
4 years ago

Financial Markets at Risk: Herd Behavior Destabilizes and Fragilizes

International Monetary Fund eBooks
Herd Behavior in Financial Markets: A Review
Sunil Sharma, Sushil Bikhchandani

Paper Summary

Financial markets can become unstable due to herd behavior, where investors follow the crowd rather than making independent decisions. Recent research has looked into what causes this behavior and its impact on markets. The findings suggest that herding can indeed destabilize financial markets and make them more fragile.

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