How do macroeconomic indicators influence investor behaviour during periods of market volatility ?

Details

Supervisors

Candelon, Bertrand

Faculty

Louvain School of Management

Degree label

Master [120] : ingénieur de gestion, à finalité spécialisée

Abstract

The aim of this thesis is to investigate the impact of macroeconomic factors such as inflation, interest rate, unemployment rate and GDP on investor behavior during different periods of market volatility. By analyzing the influences of macroeconomic factors, this study shows us the particular dynamics that govern an investor's decision-making system. This paper summarizes the findings already made on the following research topics related to the research question: influences of macroeconomic indicators, behavioral biases, market volatility and econometric methodologies. Following the literature review, this paper hypothesizes that the influences of macroeconomic indicators on investors are greatest during periods of high volatility. In the empirical part, this work observes a database from FRED and analyzes it through multiple linear regression to prove the hypothesis. Thanks to the results obtained, the hypothesis can be partially confirmed. This thesis demonstrates the complexity of financial markets and the diverse nature of investor behavior. It contributes to a better understanding of the mechanisms that guide investor decisions, and offers practical recommendations for navigating volatile market conditions.