The Impact of COVID-19 and Government Intervention on Stock Markets of OECD Countries

Yang, Haochang; Deng, Peidong

doi:10.46557/001c.18646

Cited by 66 publications

(92 citation statements)

References 12 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…Those studies have mainly enlaced the impact of Covid-19 on oil price news and crude oil price (Narayan, 2020b; Gil-Alana and Monge, 2020), on the Indian financial market (Mishra et al , 2020), on Chinese stock prices (He et al , 2020), on Chinese corporate performance (Shen et al , 2020), on commonality in volatility for five Asian booming economies (Sharma, 2020), the influence of Covid-19 on Turkish diesel consumption (Ertuğrul et al , 2020), the role of Islamic stock market to overcome any uncertainty (Salisu and Sikiru, 2020) and the impact of intellectual capital investment on Malaysian energy firm performance during this pandemic (Asif et al , 2020). Moreover, other similar studies in the context of different Asian countries show varied impacts of this pandemic on different phases like the systematic risk of Chinese commercial banks (Liu et al , 2020), stock market returns of OECD countries (Yang and Deng, 2021), Chinese currency exchange rate (Fang and Zhang, 2021), domestic credit of Chinese banks (Appiah-Otoo, 2020), etc. However, most of these studies have contributed to the energy sector literature, stock market and other trades and commerce phases.…”

Section: Introductionmentioning

confidence: 95%

“…The Covid-19 pandemic, considered one of the biggest global crises, has brought a drastic impact on the global financial sector (Narayan, 2020a; Phan and Narayan, 2020). The nationwide social distancing, quarantine and lockdown measures have affected all the sectors and brought insurmountable social and economic consequences causing an unprecedented and multi-dimensional strain on stock markets, businesses, the health sector, societies and individuals as well (Narayan et al , 2021; Yang and Deng, 2021; Arner et al , 2020). However, the banking sector is more vulnerable in this pandemic (Wójcik and Ioannou, 2020) as the majority of the economic activities of human civilisation are directly or indirectly related to and carried out through this sector (Banna et al , 2020a).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Impact of digital financial inclusion on ASEAN banking stability: implications for the post-Covid-19 era

Banna

Alam

2021

SEF

View full text Add to dashboard Cite

Purpose This paper aims to investigate how digital financial inclusion (DFI) can be a potential factor to maintain banking stability in Association of Southeast Asian Nations (ASEAN) countries and whether the relationship could bring a possible implication for the post-Covid-19 pandemic era. Design/methodology/approach Using an unbalanced panel data of 213 banks of 4 ASEAN countries, the study has deployed principal component analysis, ordinary least square, two-step dynamic system generalised method of moments and panel corrected standard errors techniques. Findings The empirical study finds that the full-fledged application of DFI accelerates the ASEAN banking stability which not only decreases the default risk of the banks but also upturns the financial mobility in the region. The results also suggest that ASEAN banks are, with the implementation of DFI, likely to uphold the banking sector stability by reducing liquidity crisis and non-performing loans during and in the post-Covid-19 era. Therefore, accelerating digital finance in ASEAN countries is considered as one of the significant means for the banking sector stability that subsequently leads to economic and financial resilience even in the face of any crises. Originality/value Prevailing studies have mostly investigated the association between financial inclusion and banking stability in different contexts. However, this study is unique to empirically investigate the association between DFI and the ASEAN banking stability.

show abstract

Section: Introductionmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

Impact of digital financial inclusion on ASEAN banking stability: implications for the post-Covid-19 era

Banna

Alam

2021

SEF

View full text Add to dashboard Cite

show abstract

“…Al-Awadhi et al (2020) and Haroon and Rizvi (2020) argue that stock market investors regard information about the increase in registered COVID-19 cases (IRCC) as a surprising macro-economic event shock that has its severe effect on equity markets and local economies. With the unabated rise in the registered COVID-19 cases, investment uncertainty rises because investors realize that authorities are expected to introduce stricter government actions to control the spread of the disease, and these actions may compromise the stability of equity markets (Ji et al, 2020;Yang and Deng, 2021;Zaremba et al, 2021). Thus, we argue that such regulatory intervening measures undermine the economy by generating much investment uncertainty.…”

Section: Hypotheses Developmentmentioning

confidence: 88%

“…The single effect of COVID-19 and financial interventions introduced by governments on returns of equity markets Several governments provide a variety of financial intervention measures to limit the severe influence of the COVID-19 on their equity markets (Ji et al, 2020;Zaremba et al, 2020Zaremba et al, , 2021World Bank Group, 2021;Yang and Deng, 2021). For example, beginning from February 1, 2020, the Chinese Government intervened to prop up the finance system by helping insurance companies and commercial banks keep delivering financial services for affected businesses.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

The single and joint effects of financial intervention policies introduced by governments and power distance culture on returns of equity markets during the COVID-19

Jamaani

2021

CCSM

View full text Add to dashboard Cite

PurposeThis paper uniquely aims to triangulate the effects of the COVID-19 pandemic, government financial intervention (GFI) policies and power distance (PD) culture on returns of equity indices during the COVID-19 epidemic in the world's equity markets.Design/methodology/approachThe research employs panel data regression analysis using 1,937 observations from 19 developed and 42 developing countries. The data employed contain daily registered COVID-19 cases, global equity market index prices, financial intervention policies introduced by governments and Hofstede's cultural dimension measure of PD.FindingsThe authors find that investors certainly react negatively to the number of confirmed COVID-19 cases reported, that GFI policies indeed reinforce investors' expectations of policymakers' dedication to stabilize the economy during the COVID-19 pandemic and that equity investors in high PD cultures overreact to GFI news, resulting in more positive stock returns. The authors discover a difference between developed and developing countries in terms of the effect of GFI policies and PD on equity returns.Research limitations/implicationsResults suggest that investors react negatively to the daily registered COVID-19 cases. The authors find that financial intervention policies introduced by governments reinforce investors' outlooks of policymakers' commitment to stabilize local stock markets during the coronavirus pandemic. The results confirm that equity market investors in PD cultures overreact to financial intervention news, thus resulting in more positive stock returns.Practical implicationsThe paper provides three original contributions. First, it helps us to understand the single effect of the COVID-19 and financial intervention policies introduced by governments on returns of the global equity market. Second, it examines the possibility of a two-way joint effect between the COVID-19 and financial intervention policies introduced by governments and the COVID-19 and differences in countries characterized by a PD culture concerning stock market returns. Third, it investigates the possibility of a three-way interaction effect between the COVID-19 contagion, financial intervention policies introduced by governments and culture on returns of equity markets.Originality/valueThe authors' findings are valuable to researchers, investors and policymakers. Culture and finance scholars can now observe the role of Brown et al.'s (1988) uncertain-information hypothesis with reference to the effect of the COVID-19 and financial interventions policies introduced by governments on returns of equity markets. This is because the authors' findings underline that since investors' uncertainty declines with daily registered numbers of COVID-19 cases, the introduction of GFI policies function as a neutralizing device to re-establish investors' expectations to equilibrium. Consequently, stock market returns follow a random walk that is free from the negative effect of the COVID-19. The authors' work is likely to advise equity investors and portfolio managers about the extent to which major exogenous economic events such the outbreak of global diseases, financial interventions policies introduced by governments and differences in countries' PD culture can individually and jointly influence the return of the world's equity markets. Investors and portfolio managers can employ the authors' results as a guideline to adjust their investment strategy based on their investment decision strategy during global pandemics. Policymakers aiming to introduce financial intervention policies to stabilize their stock market returns during global pandemics can benefit from our results. They can observe the full effect of such policies during the current COVID-19, and subsequently be better prepared to choose the most effective form of financial intervention policies when the next pandemic strikes, hopefully never.

show abstract

“…These papers stand out because they are on the topical issue of the pandemic. Naturally, global research focus has been dominated by the pandemic; see Phan & Narayan (2020; and Yang and Deng (2021). Central banks and policy makers globally have been grappling with innovative policies to counter and mitigate the negative repercussions of the pandemic, which have impacted both exchange rates and oil prices thus impacting domestic prices (see Appiah-Otoo, 2020;Devpura, 2020;Fang and Zhang, 2021;Hoang & Syed, 2021;Lan, Huang & Huang, 2020;Narayan, Devpura and Wang, 2020;and Salisu & Akanni, 2021) .…”

mentioning

confidence: 99%

Maintaining Stability, Promoting Sustainable Growth Amidst Global Challenges

Narayan¹,

Juhro²

2021

BEMP

View full text Add to dashboard Cite

The 14 th BMEB international conference was held virtually on 27-29 August 2020. The theme of this conference was "Maintaining Stability, Promoting Sustainable Growth amidst Global Challenges". Through this broad theme, and in-light of the ongoing unprecedented global economic challenges posed by the COVID-19 pandemic, this conference encouraged the rethinking of: (i) economic policy priorities amidst the global pandemic; and (ii) the economic policy mix for maintaining stability, sustaining growth, and promoting equitable welfare in the post-pandemic era.The annual BMEB conference attracts research from all over the world that focus on key macroeconomic/monetary policy and economic growth issues. Over the years the BMEB annual conference has become the premier conference in business and economics in Indonesia. The global popularity of the conference has grown immensely boosted by BMEB's SCOPUS accreditation in 2019.The 14 th conference received around 250 submissions. These submissions came from 30 different countries, with a total of 146 international paper submissions, reflecting the global appeal of the conference. These high volume of high-quality submissions at the height of the pandemic reflects the global standing of the BMEB annual conference. Of the international papers presented at the conference, we the guest editors chose seven papers that we believe bring diversity on coverage of topics and can inspire more research.These papers were selected based on the journal's rigorous review process. First, they were read by the guest editors and authors revised in response to our comments. Second, each paper was presented at a BMEB special session during the conference and each paper had a discussant. The discussant report was then used to revise the papers further before they were submitted to BMEB. Third, upon submission to BMEB, each paper was reviewed by two expert reviewers, leading to a third round of revisions. The papers were then accepted following this process.In addition to these seven papers, we decided to also publish the keynote speech entitled "Rethinking Macroeconomy and Central Banking in the New Normal"given at the conference by the Governor of Bank Indonesia, Dr. Perry Warjiyo. The keynote speech is an important policy document because it discusses key issues for central bank policy mix and maps the potential challenges that the world economy is likely to face in light of the COVID-19 pandemic.The coverage of the special issue is broad and is intentionally kept that way to have greater visibility and impact with a focus also on issues emanating due to the

show abstract

The Impact of COVID-19 and Government Intervention on Stock Markets of OECD Countries

Cited by 66 publications

References 12 publications

Impact of digital financial inclusion on ASEAN banking stability: implications for the post-Covid-19 era

Impact of digital financial inclusion on ASEAN banking stability: implications for the post-Covid-19 era

The single and joint effects of financial intervention policies introduced by governments and power distance culture on returns of equity markets during the COVID-19

Maintaining Stability, Promoting Sustainable Growth Amidst Global Challenges

Contact Info

Product

Resources

About