International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

COVID-19 Depression Impact on Retail Investor Transactions

Document Type : Original Article

Authors
Keramatollah Heydari Rostami 1
Marjan Shahali 2
Yassaman Khalili 3
Mostafa Malekian Kalehbasti 4
1 Assistant professor, Management Department, Faculty of Administrative Sciences and Economics, Arak University, Arak, Iran.
2 Assistant Professor at Department of Accounting, Damghan Branch, Islamic Azad University, Damghan, Iran.
3 Assistant Professor, Department of Accounting, Payame Noor University, Tehran, Iran.
4 Graduated with a specialized doctorate in accounting from the University of Tehran, Tehran, Iran.
10.22034/ijfma.2025.78295.2233
Abstract
The COVID-19 pandemic has reshaped financial decision-making by intertwining mental health crises with economic behaviors, yet the mechanisms linking pandemic-induced depression to transactional activities remain underexplored. This study investigates how COVID-19-related psychological distress influences real-world trading behaviors among individual investors, employing a mixed-methods framework integrating behavioral economics, psychometric assessments, and regression analysis. Focusing on 384 traders in the Tehran Stock Exchange, the research reveals that pandemic-driven depression amplifies transactional volumes, particularly among men, driven by heightened liquidity needs and risk-seeking coping mechanisms. Gender emerges as a critical moderator, with women’s financial literacy and work experience buffering anxiety-induced trading volatility, while marital status and age mediate risk aversion differently across demographics. Contrary to expectations, financial education correlates with reduced distress but does not uniformly curb risk-taking, highlighting a paradox where self-confidence and systemic risk awareness coexist. The findings challenge assumptions of homogeneous crisis responses, emphasizing the role of sociocultural norms and resource conservation strategies in shaping financial resilience. By contextualizing transactional behaviors within the “stress proliferation” framework, this study advances behavioral finance paradigms, offering insights into the gendered and cognitive underpinnings of pandemic-era decision-making.
Keywords
behavioral economics
COVID-19 depression
financial behavior
gender dynamics
retailInvestor Transactions
risk perception
1.    Abdulaziz Djalilov, K., & Numan Ulku, H. (2023). Behavioral contradictions in pandemic-era retail trading: Evidence from emerging markets. Journal of Behavioral Finance, 24(2), 45–67. 
2.    Akhtar, N., Ittefaq, H., Siddiqi, U. I., Islam, T., Hameed, Z., & Kuzior, A. (2024). Zero-COVID and retail: Using multi-wave data to examine the role of perceived risk and psychological factors in shopping abandonment. Journal of Retailing and Consumer Services, 76, 103737.
3.    Bi, M. (2023). Impact of COVID-19 on environmental regulation and economic growth in China: A way forward for green economic recovery. Economic Analysis and Policy, 77, 1001-1015.
4.    Chen, Y., Wang, H., & Zhang, L. (2025). The mediating role of decision-making styles in pandemic-induced investment behavior. Journal of Behavioral Finance, 27(3), 45–62. 
5.    Dai, L., Wang, Y., & Young, M. (2023). Risk perception asymmetry post-crisis: A neuroeconomic study of COVID-19. Frontiers in Psychology, 14, 1023456. 
6.    Dimitriou, D., & Sartzetaki, M. (2022). Criticality of a regional airport development to mitigate COVID-19 economic effects. Case Studies on Transport Policy, 10(1), 581-590.
7.    Fernandez-Perez, A., Gilbert, A., & Indriawan, I. (2024). Pandemic fear and household portfolio choices: Global evidence. Journal of Banking & Finance, 158, 107012. 
8.    Gao, R., Liu, X., & Zhou, M. (2023). Cognitive biases in retail trading during health crises: Evidence from the COVID-19 pandemic. Financial Innovation, 9(1), 112–130.
9.    Guan, D., Wang, D., Hallegatte, S., Davis, S. J., Huo, J., Li, S., ... & Gong, P. (2020). Global supply-chain effects of COVID-19 control measures. Nature Human Behaviour, 4(6), 577–587. 
10.               Hejazi, W., & Tang, J. (2021). Canadian FDI in a post COVID-19 world: Have we reached the tipping point? Transnational Corporations Review, 13(1), 88-108.
11.               Huynh, T. L. D., Foglia, M., Nasir, M. A., & Angelini, E. (2021). Feverish sentiment and global equity markets during the COVID-19 pandemic. Journal of Economic Behavior & Organization, 188, 1088-1108.
12.               Khudaykulov, A., Changjun, Z., Obrenovic, B., Godinic, D., Alsharif, H. Z. H., & Jakhongirov, I. (2022). The fear of COVID-19 and job insecurity impact on depression and anxiety: An empirical study in China. Current Psychology, 43(8), 8471–8484. 
13.               Kim, S., Park, J., & Lee, K. (2025). Long-term effects of pandemic anxiety on trading volume: A longitudinal analysis. International Review of Financial Analysis, 89, 102678. 
14.               Kumar, A., & Singh, R. (2025). Neuroticism and loss aversion in stock market participation. Personality and Individual Differences, 205, 112345. 
15.               Lee, J., Kim, M., & Choi, Y. (2024). Digital trading platforms and pandemic-induced trading behavior. Journal of Financial Services Research, 65(2), 189–207. 
16.               Lewis, K. A., Ray, P., Janibekyan, E., Kaushik, N., Anigol, D., Tieu, D., ... & Swendeman, D. (2025). The impact of the COVID-19 pandemic and lockdowns on sex workers in West Bengal, India. Journal of Community Health, 50(3), 471–485. 
17.               Liu, X., Zhou, M., & Gao, R. (2024). Rational decision-making styles and financial choices: A psychometric analysis. Journal of Economic Psychology, 98, 102654. 
18.               Martinez, P., Lopez, G., & Sanchez, R. (2024). Personality traits and cryptocurrency adoption: A cross-cultural study. Journal of Economic Psychology, 98, 102789. 
19.               Mirza, N., Rizvi, S. K. A., Saba, I., Naqvi, B., & Yarovaya, L. (2022). The resilience of Islamic equity funds during COVID-19: Evidence from risk adjusted performance, investment styles and volatility timing. International Review of Economics & Finance, 77, 276-295.
20.               Nguyen, H. H., Ngo, V. M., Le, T. T. P., & Nguyen, P. V. (2023). Do investors’ personalities predict market winners? Experimental setting and machine learning analysis. Heliyon, 9(4), e15273.
21.               Nguyen, T., Tran, Q., & Pham, H. (2024). AI-driven sentiment analysis and retail investor behavior. Expert Systems with Applications, 238, 121456. 
22.               Niculaescu, C. E., Sangiorgi, I., & Bell, A. R. (2023). Does personal experience with COVID-19 impact investment decisions? Evidence from a survey of US retail investors. International Review of Financial Analysis, 88, 102703.
23.               O’Connor, P., Walsh, E., & Lynch, M. (2023). Extraversion and trading frequency: New evidence from neuroimaging. Neuroscience of Decision Making, 15(4), 234–251. 
24.               Ortmann, R., Pelster, M., & Wengerek, S. T. (2024). COVID-19 and retail investor behavior: Evidence from brokerage accounts. Journal of Economic Psychology, 98, 102654. 
25.               Patel, S., Gupta, R., & Kumar, V. (2025). Robo-advisors and cognitive bias mitigation in uncertain markets. Technological Forecasting and Social Change, 198, 123456. 
26.               Piñeiro-Chousa, J., López-Cabarcos, M. Á., Quiñoá-Piñeiro, L., & Pérez-Pico, A. M. (2022). US biopharmaceutical companies' stock market reaction to the COVID-19 pandemic. Understanding the concept of the ‘paradoxical spiral’ from a sustainability perspective. Technological Forecasting and Social Change, 175, 121365.
27.               Reiter-Gavish, L., Qadan, M., & Yagil, J. (2022). Investors' personal characteristics and trading decisions under distressed market conditions. Borsa Istanbul Review, 22(2), 240-247.
28.               Samitas, A., Kampouris, E., & Polyzos, S. (2022). Covid-19 pandemic and spillover effects in stock markets: A financial network approach. International Review of Financial Analysis, 80, 102005.
29.               Talwar, M., Talwar, S., Kaur, P., Tripathy, N., & Dhir, A. (2021). Has financial attitude impacted the trading activity of retail investors during the COVID-19 pandemic? Journal of Retailing and Consumer Services, 58, 102341.
30.               Tanaka, H., Sato, Y., & Yamamoto, T. (2023). Self-control and portfolio diversification during crises. Journal of Banking & Finance, 157, 107890. 
31.               Tversky, A., & Kahneman, D. (2023). Prospect theory revisited: Applications in pandemic markets. Journal of Economic Perspectives, 37(1), 221–240. 
32.               Verschuur, J., Koks, E. E., & Hall, J. W. (2021). Observed impacts of the COVID-19 pandemic on global trade. Nature Human Behaviour, 5(3), 305–307. 
33.               Wang, X., & Zhang, X. (2024). Infectious disease outbreaks and the disposition effect of mutual fund investors. Journal of Banking & Finance, 161, 107344.
34.               Xiang, W., & Ma, C. (2025). How do auditors respond to major emergencies? Empirical evidence from the COVID-19 pandemic. Managerial Auditing Journal, 40(5), 483-519.
35.               Zhang, Q., & Wang, Y. (2025). Big data analytics in behavioral finance: Future directions. Annual Review of Financial Economics, 17, 345–367.