Resilience of an online financial community to market uncertainty shocks during the recent financial crisis

Abstract

This paper examines the impact of market uncertainty shocks on an online forum of investors by measuring knowledge dynamics and user behaviour before and during the recent financial crisis. We looked at about 11 million messages of the finanzaonline.com online forum from 2003 to 2012 and measured user activity, the informative content of the posts and peer-to-peer communication. We also developed a ranking of forum users to measure their level of expertise. We found that market uncertainty has a dramatic effect on user population dynamics and the type of knowledge shared and that this depended on crisis evolution. While less expert user behaviour changed during the crisis evolution becoming more sensitive to external shocks, expert users typically pondered their response to shocks both before and during the crisis. Thanks to high variety of population dynamics, the forum played different roles depending on the stages of the crisis: sharing news during crisis outbreak, sharing more technical analysis during crisis progression. Our findings indicate the importance of promoting dynamism and communication opportunities in these online communities to give dispersed, non-professional investors the opportunity to collaborate in knowledge sharing and generation.