Behavioral Financial Perspective of Government Bonds During Covid 19 Pandemic

Abstract

The COVID-19 pandemic causes changes in social and economic life. Research on the impact of Covid 19 on various aspects continues to be carried out, including on investor behavior and its impact on the capital market, but very few discuss the impact of Covid 19 on debt instruments such as government bonds. This study tries to examine the impact of Covid 19 in terms of financial behavior by using Covid 19 fear as a psychological element using data from Google Trends, also testing the number of Covid 19 deaths and the number of Covid 19 cases on Indonesian government bond yields. The results show that fear of covid 19 and death of covid 19 positively affected yield, and the cases of covid 19 negatively affected yield. Investors are trying to take advantage of the negative sentiment from the Covid 19 by buying government bonds which causes an increase in bond price and a decrease in yield. This study contributes to behavioral finance theory on fixed-income investment, especially government bonds.