Influence Mechanisms and Control Strategies of Public Sentiment and Opinion in Financial Contagion

This paper investigates the influence mechanisms of public sentiment in the process of financial contagion and explores strategies for mitigating such contagion through public opinion management. Financial contagion refers to the transmission of market disturbances from one country to another, in which public sentiment plays a pivotal role as both a catalyst and an amplifier. Core transmission channels include interbank linkages, trade connections, information asymmetry, investor behavior, self-fulfilling prophecies, and spread of rumors and misinformation. Positive public sentiment can promote market stability, while negative sentiment can intensify capital flight panic selling, thereby worsening contagion. Mass media and social media platforms serve dual functions in amplifying sentiment and shaping public opinion. To effectively manage public sentiment and curb the spread of financial contagion, this study proposes several strategies: establishing transparent and proactive communication channels by governments and regulators; adopting effective media and public relations practices by financial institutions; identifying, controlling, and countering misinformation and disinformation; and fostering public trust through enhanced transparency and credibility. This paper further explores the interaction between public sentiment and financial contagion by reviewing cases such as the Asian Financial Crisis, the Global Financial Crisis, and recent bank failures. Finally, the paper proposes policy recommendations and best practices for enhancing resilience against sentiment-driven financial contagion, including strengthening information disclosure, comprehensive crisis communication planning, greater investment in financial literacy, enhanced multi-stakeholder collaboration, and the formulation of ethical standards for financial communication.