The Impact of Behavioral Investor Sentiment on Bank Continuity:(An Applied Study on a Sample of Banks in the Iraq Stock Exchange)

Abstract

Investor sentiment is considered one of the most significant environmental variables affecting the continuity of banks. Accordingly, this research aims to investigate the extent to which behavioral investor sentiment influences bank continuity. The independent variable (investor sentiment) was measured using two indicators: trading volume and overnight return, while the dependent variable (bank continuity) was measured using the Z-Score model, later known as the Zeta 3 model, which was developed by Altman, in collaboration with Hartzell & Peck in 1995. This model is used to assess a bank's ability to continue its operations .The theoretical framework of the study was based on the deductive approach, and to achieve the research objectives, data was collected from annual reports published by the Iraq Stock Exchange. The study sample included ten commercial banks over the period 2014–2023. The research variables were quantitatively measured using financial data, in addition to employing appropriate statistical methods .The results revealed a statistically significant impact of behavioral investor sentiment on the continuity of banks. As for the recommendations, one of the most important is that the Iraq Stock Exchange should support research related to studying and understanding behavioral investor sentiment by funding studies that examine the psychological and behavioral factors affecting investment decisions, and by utilizing the results of such studies to develop more efficient policies and practices that enhance market stability and efficiency.