When words move money

In finance, words can change what people do with their money. A post by an asset manager can make a fund more visible to investors. A message about a bank can make depositors wonder whether others are about to withdraw their money. Social media did not create these basic financial choices, but it has changed how quickly people hear about them, react to them, and see other people reacting too.

This is why the power of words matters for financial markets: not because every message is important, but because some messages arrive at moments when attention and confidence are already fragile.

From information to persuasion

Finance has always depended on communication. A prospectus explains a strategy, a central bank statement shapes expectations, and a rumor can weaken confidence before any balance sheet has changed. What is different today is how public and fast this communication has become. On X, LinkedIn, YouTube, Reddit, and other platforms, financial messages are seen together with likes, reposts, comments, followers, and tone. Readers do not only see the message; they also see whether other people appear to be paying attention.

This creates a simple but important distinction. Some messages give investors useful information. Others mainly make an option easier to notice or more reassuring. That difference matters because many financial decisions are made with limited information. A household choosing a mutual fund cannot directly observe the manager's ability. A depositor reading news about a bank does not know what other depositors will do.

In these situations, words can inform, but they can also make people more confident, more worried, or more likely to act because they think others may act first.

When fund families speak

In Tweeting for Money: Social Media and Mutual Fund Flows (1), Javier Gil-Bazo and Juan F. Imbet study more than 1.6 million posts on X/Twitter by U.S. mutual fund families (a group of funds managed and marketed by the same asset management company). 

The paper finds that flows of money into mutual funds respond positively to both the quantity and the tone of these posts, regardless if they have been written in good or bad times. Funds whose families communicate more, and communicate more positively, attract more investor money and experience fewer outflows.

A natural question is how to know whether social media is really driving these flows, rather than simply moving at the same time as something else. For example, a fund family may tweet more when markets are already favorable, or when investors were already planning to invest. 

To address this, the paper looks closely at timing. It uses high-frequency data on Exchange Traded Funds (ETFs) managed by the same fund families and asks whether market prices react in the minutes after a tweet is posted. The authors also identify tweets aimed at persuading investors, or just providing market commentary, and show that the social media strategy persuades investors. 

This makes the comparison much sharper: instead of only asking whether active social media accounts attract more money over long periods, it asks whether investors react right after the message appears.

This approach helps separate the effect of the tweet from other explanations that move more slowly. The evidence suggests that investors do react quickly to these posts. At the same time, the posts do not appear to reveal manager skill or clear information about future performance. The interpretation is therefore not that investors learn that a fund is better, but that the wording, tone, and timing of communication can make investors more likely to act.

When worry spreads quickly

A related paper, Social Media as a Bank Run Catalyst (2), studies the role of social media during the U.S. banking stress of 2023, including Silicon Valley Bank. Using more than five million tweets, J. Anthony Cookson, Corbin Fox, Javier Gil-Bazo, Juan F. Imbet, and Christoph Schiller show that social media attention was associated with greater run risk among banks that were already fragile.

The point is not that social media provoked the weakness of these banks. Fragile balance sheets, uninsured deposits, and concentrated depositor bases mattered. But online attention helped determine how quickly concern became action.

A bank run is not only about whether one depositor trusts the bank. It is also about whether that depositor thinks many other people may withdraw first. In that environment, a message, a thread, or a widely shared interpretation can make waiting feel riskier. What might once have unfolded more slowly can now move within days or hours.

Here again, the role of words comes partly from their public nature. Social media makes concern visible. Depositors can see others expressing doubts, investors can see a story gaining traction, and journalists can see which interpretation is being repeated. A message does not need to settle the facts to matter. It can matter because it changes what people think others are likely to do.

What the power of words means for finance

Taken together, these papers show that financial communication is not separate from financial decisions. It affects what people notice, how confident they feel, and how they interpret the actions of others. This can be useful when communication makes finance more understandable. It can also create risks when a positive tone replaces careful analysis, or when online concern spreads faster than institutions can respond.

These findings offer practical lessons for all financial stakeholders, including asset managers, banks, regulators, investors, and depositors. 

For asset managers, the challenge is to communicate clearly without making persuasion look like performance. For banks, the challenge is to understand that silence, delay, and ambiguity may be interpreted in real time by audiences already comparing their concerns online. For regulators, the challenge is to pay attention not only to prices and balance sheets, but also to the public narratives that can affect them. For investors and depositors, the challenge is to ask a basic question: is this message giving me new information, or is it mainly making me feel that others are moving?

The age of financial social media is often described as the age of likes. The evidence suggests that the words themselves deserve just as much attention. A post can help attract capital to a fund. A thread can contribute to depositors' concerns about a bank. The question is therefore not whether finance should pay attention to online communication. It already does. The question is how to understand when words inform, when they persuade, and when they make a fragile situation move faster. This is what Juan F. Imbet and his co-authors aim to address in their research agenda. 

References

(1) Gil-Bazo, Javier, and Juan F. Imbet. 2025. "Tweeting for Money: Social Media and Mutual Fund Flows." Management Science 72(8): 6872-6903 - https://pubsonline.informs.org/doi/10.1287/mnsc.2024.07584

(2) Cookson, J. Anthony, Corbin Fox, Javier Gil-Bazo, Juan F. Imbet, and Christoph Schiller. 2026. "Social Media as a Bank Run Catalyst." Journal of Financial Economics 176: 104218 - https://www.sciencedirect.com/science/article/abs/pii/S0304405X25002260

Imbet, Juan. 2026. "La finance a l'ere des likes: nouveaux pouvoirs, nouveaux risques." Universite Paris Dauphine PS - https://dauphine.psl.eu/eclairages/article/la-finance-a-lere-des-likes-nouveaux-pouvoirs-nouveaux-risques

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