MULTIBUBBLES IN BORSA ISTANBUL RETAIL STOCKS DURING COVID19 PANDEMIC

Year 2021, , 158 - 159, 31.12.2021

Hakan Mentes Ayben Koy

https://doi.org/10.17261/Pressacademia.2021.1519

Abstract

Purpose- Asset bubbles, which can be explained as the separation of financial asset prices from the random walk process, can be shown up
in different financial markets. Tirole (1985) counts the three actors that cause bubbles: durability, scarcity and common beliefs. These
common beliefs can also be associated with the behavioral finance approach. In the behavioral approach, bubbles are explained by herding
behavior. Investors making similar decisions in the same directions do not mean that there is always a herding behavior. In the efficient
markets, the information is available to all investors that they make transactions in the same direction by evaluating the information same.
While the investors are rational, they make similar investment decisions. Buying or selling the same securities without a specific reason is
defined as herding behavior. In this study, the existence of price bubbles in the stocks of companies traded in the BIST100 retail index related
to the Covid-19 epidemic period is investigated.
Methodology- The study employs Sup Augmented Dickey Fuller (SADF) and Generalized Sup Augmented Dickey Fuller (GSADF) tests to
investigate the presence of bubbles or date the bubbles. The period of the study is from January 2016 to September 2021.
Findings- The results of the SADF test identify price bubbles in all stocks except one, the GSADF test gives results indicating that there are
bubbles in all stocks.
Conclusion- During the covid19 pandemic, both the sectoral reasons specific to the pandemic and the participation of many new investors
in the financial markets caused high price movements in stocks and especially in the retail sector. This study explores asset bubbles during
the covid19 pandemic. The results prove that there are single and multiple bubbles in the stocks in the BIST retail index.

Keywords

Bubble, covid19, retail, stock market

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