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  • MKT Research

Flattening the Illiquidity Curve: Retail Trading During the COVID-19 Lockdown

Forthcoming in the Journal of Finance and Quantitative Analysis

By Gideon Ozik, Ronnie Sadka, and Siyi Shen


This article studies the impact of retail investors on stock liquidity during the COVID-19 pandemic lockdown in spring 2020. Retail trading exhibits a sharp increase, especially among stocks with high COVID-19–related media coverage. Retail trading attenuated the rise in illiquidity by roughly 40% but less so for high-media-attention stocks. Causality is addressed using the staggered implementation of the stay-at-home advisory across U.S. states. The results highlight that ample free time and access to financial markets facilitated by fintech innovations to trading platforms are significant determinants of retail-investor stock market participation.

Read a working paper version of this article here

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