ABSTRACT. This article explores the impact of the COVID-19 lockdown in Belgium on the financial behavior of individual investors. Specifically, the article is the first to examine whether exceptional market circumstances have induced individual investors to increase their equity positions. Using a proprietary database of almost 6.5 million individual investor transactions, this article shows that most individuals increased their equity positions during the pandemic, suggesting a contrarian strategy. Especially investors between 18 and 35 years old and those being less active are found to increase their equity positions compared to other age and activity level categories. Male investors seem to dominate equity markets in Belgium, even during the COVID-19 confinement period, and they increased their equity positions more in comparison to women. The patterns documented in this article are robust for the shares being constituents of the main Belgian equity index (i.e., Bel 20), for all listed shares on Euronext Brussels, and for small caps.
JEL codes: D53; E22; E32; E44; G01; G41

Keywords: individual investors; investment strategy; equity investments; COVID-19; behavioral finance; MiFIR

How to cite: Priem, R. (2021). “An Exploratory Study on the Impact of the COVID-19 Confinement on the Financial Behavior of Individual Investors,” Economics, Management, and Financial Markets 16(3): 9–40. doi: 10.22381/emfm16320211.

Received 18 February 2021 • Received in revised form 27 July 2021
Accepted 3 August 2021 • Available online 20 August 2021