What do tweets teach us about shocks to financial markets?

Principal Investigator: Mohamed Al Guindy, Finance
Project Title: Dynamic Networks in Financial Markets
Funder: Canada Foundation for Innovation – John R. Evans Leaders Fund

This research will explore how economic shocks travel within the economy and how they impact surrounding or neighbouring firms. These issues are important to the understanding of financial crises as well as shocks to the economy – including shocks due to COVID-19.

These networks of the economy are captured and updated by leveraging the wisdom of the crowd of tens of millions of investors tweeting hundreds of millions of financial tweets about firms. Such approach ensures that the network representation captures the various economic connections among firms as seen by a large number of investors. Moreover, these networks evolve over time, and do so rapidly in response to financial and economic changes.

This mapping out of the economy and investigation of shocks will be vital to public institutions and policy makers, regulators, researchers, risk managers, investors, and financial market participants. As this research will shed light on how shocks propagate in the economy, and which firms or clusters of firms are most central/influential, it gives policymakers a context into which economic intervention programs can be most useful in reviving the economy – at times of recessions for example.