Stock Market-Driven Factors of Investors’ Sentiment A Review of The Stylized Facts

Abstract

Investigating the stylized facts of different driving facets of retail investors’ sentiment is non-existent in the literature. This study aims to find such market-driven factors by reviewing the relevant literature. More specifically, this study finds how investors’ sentiment is developed from the nature of stock markets, Index/stock returns, investors’-friendly stock market environment, primary market activities, information uncertainty, trading volume and momentum, market technical and institutional investors’ investment activities. A literature review approach is undertaken in this study. All the available published literature as collected from different search engines is thoroughly reviewed to explain critically the stylized facts of the facets of above market-driven drivers. This study finds that all the market drivers have some specific role to play in influencing investors’ sentiment. So, this review study will be of immense help to the retail investors, professional investment communities and many others concerned in finding out the weaknesses of them and thereby avoid them or solve them. Also, this study undertakes a well-researched topic of investor sentiment, but in its unique way. No previous studies are found to do a review research to find out the sources from where the retail investors generate their sentiment. Also, no other studies clarify the stylized facts of the facets of above sentiment drivers.

Key Words:Investors’ sentiment, Stylized facts, Market factors.

Article Classification: Literature Review