Economic freedom, economic sustainability, and herding behavior: Does the ubiquity of information communication technology matter?

Abstract This study investigates the impact of information communication technology (ICT), economic freedom, and economic sustainability on herding behavior, and examines whether the link between economic freedom and economic sustainability depends on ICT. Using quantile regression on a sample of seven Gulf Cooperation Council stock markets from 2004 to 2020, we find that ICT and economic freedom reduce herding in lower quantiles while promoting it in higher quantiles. Conversely, open market freedom and economic sustainability appear to correct herding in all quantiles. The results show that ICT reinforces the move away from herding seen with economic freedom for the transmission channel of ICT on herding. However, ICT plays a dual role in open market freedom and economic sustainability, weakening (strengthening) the curative effect of economic sustainability (open market freedom) in the lower quantiles and strengthening (weakening) it in higher quantiles. Thus, the highest impact in reducing herding exits through the combination of ICT and economic freedom is skewed to the lower quantiles with ICT-open market freedom and skewed to the upper quantiles with ICT-economic sustainability. These results offer substantial implications for policymakers.