Kaukonen, Ville – Vaihekoski, Mika – Saarto, Annika (2026) Impact of Airborne Pollen on Stock Market Volatility. Forthcoming in the Research in International Business and Finance, vol. 90, 103529. Available as an open-access article at https://doi.org/10.1016/j.ribaf.2026.103529.
Abstract
Environmental factors have been shown to influence investor behavior through mood and cognitive channels, yet existing evidence based on weather-related proxies remains mixed. Unlike much of the previous environmental-finance literature, which primarily examines stock returns and weather-induced mood effects, this study focuses on whether airborne pollen exposure, a biologically grounded physiological stressor, influences stock market volatility itself.
Using daily Finnish pollen observations and stock market data from 1991–2024, we estimate an EGARCH-X model that incorporates pollen exposure together with weather variables, calendar effects, and market controls. The results indicate that elevated pollen exposure is associated with significantly lower conditional stock market volatility. The estimated relationship remains robust across alternative pollen measures, volatility specifications, distributional assumptions, and control sets.
To examine potential channels underlying the documented relationship, supplementary analyses incorporate aggregate trading activity, liquidity conditions, and market-segment heterogeneity. The findings suggest that the documented pollen effect is not mechanically explained by broad liquidity conditions and remains robust after accounting for trading activity. Moreover, the interaction results indicate that the volatility-reducing effect of elevated pollen exposure weakens as trading activity increases.
Overall, the findings are consistent with the interpretation that allergy-related physiological and cognitive burden may affect market participation and investor behavior. The study contributes to the literature by introducing a biologically grounded channel through which environmental conditions may influence financial market risk.
