Financial Markets in the Age of Infodemics: A Systematic Review on the Impact of Information Disorder

Abstract

The infodemic created by information disorders deeply affects not only daily life but also our future decisions. In this context, understanding how infodemics influence investors, individuals making financial decisions, and consequently, financial markets has become an important research area. This study systematically examines the types of information disorders analyzed by research studies on the financial impacts of infodemics, the platforms through which these disorders are disseminated, the effects, and possible preventive measures. Following a comprehensive search across nine databases, 41 articles meeting the inclusion criteria were identified. Among the reviewed studies, the most common type of information disorder was found to be rumors (n = 11), with these studies mostly conducted on social media platforms (n = 10). Although research in this area has increased in recent years, the current literature is still deemed insufficient. Information disorders often have negative effects on investors, leading to market fluctuations. Since investors cannot accurately differentiate the source of information, there is a need for algorithmic and machine learning-supported tools. Decision-makers can take precautions against the infodemic by developing regulatory mechanisms, enforcing sanctions, and ensuring a reliable flow of information. This study is the first to systematically address the financial impacts of the infodemic, raising awareness of irrational decision-making processes in markets and providing a comprehensive perspective for relevant stakeholders.