Herd Behavior Tendencies of Investors and the Effect of Monetary Policy on Herd Behavior: A Case of BIST

This study aims to investigate the effect of monetary policy decisions made by policymakers on investor behavior. First, herd behavior in the equity market was investigated in crises, Covid-19, and socio-economic uncertainty. The cross-sectional variance of betas was used as a measure of herd behavior. The findings indicate that herd behavior increases sharply during the global crisis, pandemic, uncertainty, and bull markets. Secondly, the effect of monetary policy decisions on herd behavior in the Borsa Istanbul equity market was investigated. The applied Autoregressive Distributed Lag (ARDL) bound test showed that unconventional monetary policy instruments affect herd behavior.