Financial Stress and Its Role in the New Trend of AI Investing
Financial Stress and Its Role in the New Trend of AI Investing

Author(s): Sandra Matušovičova
Subject(s): Social Sciences
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Financial stress; AI investing; Stock market
Summary/Abstract: Investment asset prices are increasingly more determined not only by economic fundamentals, but also by non-financial behavioral factors, such as the investor sentiment and emotions. One of key emotions in investing is financial stress, which tends to be high during economic crises and low during periods of growth. This paper aims to identify how strong is the impact of financial stress on the growth of technology stock prices during the current AI boom. Using regression analysis and econometric modeling, including a proxy variable of Financial Stress Index (FSI) from the Federal Reserve System of St. Louis, the results showed at 5% level of significance (p < 0.05) a negative correlation with a coefficient of ß1=-605,67 between financial stress and AI stock prices. These findings confirm that lower levels of stress contributed to AI investment growth and provide investors implications to incorporate not purely economic factors in decision-making and investment strategies.

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