Skip to Main content Skip to Navigation
Journal articles

Central Bank Communication in the Media and Investor Sentiment

Hamza Bennani 1 
Abstract : This paper explores the relationship between central bank communication and investor sentiment. We first use media coverage on Fed chair’s communication to quantify the degree of confidence and optimism expressed by the Fed chair and call this variable the overconfidence indicator. Second, we relate the overconfidence indicator to investor sentiment. Our results show that an overconfident Fed chair is significantly associated with higher investor sentiment. Further extensions suggest that (i) investors are more sensitive to central bank communication during a recession and that (ii) they adjust rapidly their sentiment following central bank communication, thus showing that there is no underreaction bias. These findings provide additional insights on how central bank communication shapes investor sentiment in the context of the Global Financial Crisis and the zero lower bound on nominal interest rates.
Document type :
Journal articles
Complete list of metadata
Contributor : Accord Elsevier CCSD Connect in order to contact the contributor
Submitted on : Tuesday, June 21, 2022 - 7:49:59 AM
Last modification on : Tuesday, June 21, 2022 - 7:49:59 AM
Long-term archiving on: : Thursday, September 22, 2022 - 6:49:12 PM


Files produced by the author(s)


Distributed under a Creative Commons Attribution - NonCommercial 4.0 International License



Hamza Bennani. Central Bank Communication in the Media and Investor Sentiment. Journal of Economic Behavior and Organization, Elsevier, 2020, 176, pp.431-444. ⟨10.1016/j.jebo.2020.05.022⟩. ⟨hal-02615852⟩



Record views


Files downloads