Individual investor trading and stock returns after the Covid-19 pandemic: Evidence from Korea

This paper reveals a significant attenuation in the previously observed positive association between individual investors' purchases and stock returns following the Covid-19 pandemic. To investigate these changes, I utilize a comprehensive dataset of daily stock transactions, categorized by investor groups, from the Korean main board market. By employing a differencein -difference regression model, I find that stocks influenced by the influx of amateur investors or attention -based trading post -pandemic are the key drivers behind this transformation. These findings suggest that policymakers might need to consider implementing systematic liquidity provision programs, such as market -making activities, to fill the liquidity gap created by individual investors.