Dutch Journal of Finance and Management
Research Article

Looking for Psychological Barriers in nine European Stock Market Indices

Published online: 08 Aug 2016
Download: 165
View: 727

Abstract

In this paper we examine nine European stock market indices for indication of psychological barriers at round numbers. We test for uniformity in the trailing digits of the indices and use regression and GARCH analysis to assess the differential impact of being above or below a possible barrier. Despite having rejected uniformity for all data series, we only found significant psychological barriers in the stock markets of Germany, Finland and the Netherlands. Moreover, we document that the relationship between risk and return tends to be weaker at the proximity of round numbers which poses a challenge to the traditional equilibrium models.

---
Related Subjects
Finance & Management
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Submit My Manuscript



Phone: +31 (0)70 2190600 | E-Mail: info@lectitojournals.com

Address: Cultura Building (3rd Floor) Wassenaarseweg 20 2596CH The Hague THE NETHERLANDS

Disclaimer

This site is protected by copyright law. This site is destined for the personal or internal use of our clients and business associates, whereby it is not permitted to copy the site in any other way than by downloading it and looking at it on a single computer, and/or by printing a single hard-copy. Without previous written permission from Lectito BV, this site may not be copied, passed on, or made available on a network in any other manner.

Content Alert

Copyright © 2015-2017 Lectito BV All rights reserved.