The Impact of COVID-19 Pandemic on Stock Market: Evidence from Romania

Abstract

The current health crisis has several socioeconomic influences that could be compared to those experienced during the 2008 economic and financial crisis. Governments around the world are making great efforts to sustain markets as there are signs showing that the health crisis will be followed by an economic crisis. In this study, we aim to investigate the impact of COVID-19 on the Romanian stock market. For this purpose, we considered the influence on the Bucharest Exchange Trading (BET) index of such variables as the number of new cases and the number of new deaths caused by COVID-19, measures taken by authorities, and the international economic context. The collected data covered the period between 11 March 2020 and 30 April 2021. The Autoregressive Distributed Lag (ARDL) Bound cointegration test was used to measure the impact of COVID-19 on the stock market. The results showed a significant long-term negative impact of the pandemic on the BET index for Romania, while the European economic context had a positive influence. Therefore, these results could be used by authorities as a good guideline for the efficient management of measures that aim to reduce the negative effects of the healthcare crisis.

COVID-19 Shock and Sectorial Index Response in South Africa: A Cross-sector Analysis

“…Falato et al (2021), on the other hand, submitted that the Federal reserve actions, through funds transmission to the primary market, helped to reduce the adverse effect caused by the Pandemic in the long run. Contrary to short term claims, Hatmanu and Cautisanu (2021), using an ARDL cointegration test, reported a significant long-term impact of the Pandemic on the Romanian index and a positive impact on the European economy. Erdem (2020) reveals that COVID-19's adverse effects on stock markets are more pronounced in lower financial freedom countries.…”

“…Ngwakwe (2020) showed that the Chinese Stock market's composite index indicated an upsurge in average stock prices that were more sustainable than before the Pandemic levels. In the same vein, Hatmanu and Cautisanu (2021), using an ARDL cointegration test, reported a significant positive impact of the Pandemic on the European economy. Furthermore, Al-Awadhi et al ( 2020) noted that Pharmaceutical and IT stocks in the Chinese stock market recorded higher returns outperforming all other sectors.…”

Covid-19 Pandemi̇si̇ni̇n Seçi̇li̇ Dünya Borsalari Üzeri̇ndeki̇ Etki̇si̇

“…,2018;Jones ve Banning,2009;Smales,2015) finansal piyasalara etkilerini araştıran sayısız çalışma bulunmaktadır. Bu çalışmanın ana motivasyonunu oluşturan COVID-19'un finansal piyasalara etkisini araştıran çalışmalar (Faque ve Hacıoğlu, 2021;Hatmanu ve Cautisanu, 2021;Buszko vd.,2021) literatürde yeni de olsa geniş yer kaplamaktadır. Aşağıda bu çalışmalara kısaca değinilmiştir.…”

Global Impact of Coronavirus Disease 2019 (COVID-19)

“…Small Businesses are rarely competitors to giant corporations. Instead, small businesses are a huge revenue source for most of the S & 500 companies [41] [42]. If the second wave comes, and there is no guarantee, then the lockdown of state economies may create panic selling of stocks.…”

“…When the market is stressed right now, it is a wise investor who pauses to consider risk, inherent risk, hidden risk, and potential risk before making decisions. Speculators, aka gamblers, can create substantial speculative runs that collapse [41].…”