Financial fragility in the COVID-19 crisis: The case of investment funds in corporate bond markets

Falato, Antonio; Goldstein, Itay; Hortaçsu, Ali

doi:10.1016/j.jmoneco.2021.07.001

Cited by 169 publications

(60 citation statements)

References 33 publications

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“…This may indicate that investors are more financially aware and that they understand that investments in the stock market are subject to fluctuationssometimes aggressively. In this sense, there was no significant loss of resources as documented by Falato et al (2021). In addition to Figure 2, it can be seen that in the pre-crisis period there was a very strong net fund flows, while, in the crash period and in the recovery period, the net fund flows fell a lot, becoming more centered around zero than before.…”

Section: Return Of Funds and Financial Flowsmentioning

confidence: 76%

“…Similarly, by analyzing European funds, they show that social entrepreneurship funds (those who invest in companies that help in social issues and do not target profit) were more resilient to shock than others, both in terms of performance and volatility. Falato, Goldstein, and Hortaçsu (2021) point out that American funds in the private securities market had a significant loss of resources during the crisis, and that this fragility was caused by the illiquidity and vulnerability to a rapid sale of the assets held by these funds.…”

Section: Introductionmentioning

confidence: 99%

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Performance and risk of Brazilian equity mutual funds in the context of the covid-19 pandemic

Teles¹,

Lima²,

Silva³

et al. 2022

Rev. Cat. Cien. Cont.

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The goal of this research was to analyze how Brazilian equity investment funds behaved during the Covid-19 period. The analysis was divided into 3 sub-periods: (i) pre-crisis (2019-10-03 to 2020-01-31); (ii) crash (2020-02-19 to 2020-03-23); (iii) and recovery (2020-03-24 to 2020-04-30. The main results showed that during the crash period, in all the categories, more than 50% of the funds obtained a return superior to that of the IBRX100. However, in the recovery period, the scenario is reversed and the vast majority of funds start to underperform the index. However, when performance is analyzed from the perspective of multifactor risk models, it is possible to identify positive alpha generation during the pre-crisis period and negative (destruction of value) during the crash period. In addition, when examining fund flows, it can be seen that there was no "run on the fund" phenomenon to redeem the shares. Actually, in the analyzed period, the inflows surpassed the redemptions. This may indicate that the fund investors are financially more educated and that he or she acted with more caution when waiting for a less turbulent moment. The article concludes that the industry was coming from an excellent performance in the pre-crisis period, which was interrupted by a period of value destruction during the moment of the greatest turmoil, and that, finally, during the recovery period, the performance was below the market index, but without generating or destructing significant value.

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Section: Return Of Funds and Financial Flowsmentioning

confidence: 76%

Section: Introductionmentioning

confidence: 99%

Performance and risk of Brazilian equity mutual funds in the context of the covid-19 pandemic

Teles¹,

Lima²,

Silva³

et al. 2022

Rev. Cat. Cien. Cont.

View full text Add to dashboard Cite

show abstract

“…The literature is searched using Google as a search engine while exploring various databases like ScienceDirect, Taylor & Francis, JSTOR, Emerald, EBSCOhost, and Wiley-Blackwell. Keeping in view the context of the study, we focused on studies published after June 2020 to January 2022 on the subject of financial management, viz., financial development, remittance, and poverty reduction, in Sub-Saharan Africa, post-COVID-19 macroeconomic policies (Acheampong et al, 2021 ), comparison of the G20 countries’ stock market in the pre-COVID-19 and post-COVID-19 pandemic (Alqahtani et al, 2021 ), and examining the determinants of financial well-being and general well-being during COVID-19 pandemic; the case of Sweden (Barrafrem et al, 2021 ), role of environmental, social, and governance (ESG) during the COVID-19 pandemic time of financial crises in China (Ahmad et al 2021 ; Broadstock et al, 2021 ), financial distress among Spanish hospitality firms during the COVID-19 disaster (Crespí-Cladera et al, 2021 ), and financial fragility in COVID-19 outbreak; in the case of investment funds in the USA (Falato et al, 2021 ), examine the financial health of Latin American (Giordano et al, 2021 ), use of IT systems in financial services during the COVID-19 pandemic in Poland (Halina & Magdalena, 2021 ), and impact of the COVID-19 pandemic on the connectedness of Hong Kong financial market (So et al, 2021 ), and loss of financial well-being, survey carried to 1,222 Brazilians (Vieira et al, 2021 ). It is impossible to delineate every study available on the topic.…”

Section: Literature Reviewmentioning

confidence: 99%

Assessment of sustainable green financial environment: the underlying structure of monetary seismic aftershocks of the COVID-19 pandemic

Abbass

Niazi

et al. 2022

Environ Sci Pollut Res

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The study aims to assess a sustainable green financial environment by exploring the underlying structure of monetary seismic aftershocks of the COVID-19 pandemic. This study is qualitative and uses a review of literature, primary data collection methods, and qualitative analysis techniques as the study’s overall design. The data is collected by one-to-one interview using a matrix style questionnaire from a panel of experts based on the purposive sampling technique. Interpretive structural modeling (ISM) combined with Matrices’ Impacts Cruise’s Multiplication Appliquée a UN Classement (MICMAC) is used for assessment, modeling, and analysis of data. The monetary aftershocks, namely, “more cash in hand required,” “decreased travel costs,” “shift to more certain or fixed revenue streams,” “lower rent costs,” “more zealous monitoring of cash collection cycle,” and “decreased entertainment costs,” occupy level I (top of the model being least critical shocks), and “tedious regulations” occupy level VIII (bottom of the model being the most vital) . Other aftershocks form the middle of the model being moderate critical. Analysis of MICMAC shows that monetary seismic aftershocks high fees for assistance regarding SOPs, tedious regulations, and more downtime due to pandemic alerts are independent. This study addresses the core issue from within the aftermath of the COVID-19 pandemic. It provides new important information regarding the structure of a sustainable green financial environment that is useful for economists, financial analysts, commercial and central bankers, accountants and finance managers from the organization’s public/and private sectors, local and international community, and researchers of the domain. It provides an informative structural model and classification of critical aftershocks. There are specific data/methodological/resource-related limitations of the study. The study’s data are collected from a focus group; the study’s methodology is qualitative and indicates relations among variables that do not quantify the associations. The study is a typical initiative of academic researchers with limited financial/physical resources; therefore, the generalizability of the study results is accordingly limited. The study is based on original, essential data and innovatively and creatively approaches the problem. It provides a unique model of an unprecedented phenomenon for reverberating the sustainable green financial environment.

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“…Isso pode indicar que os investidores estão mais conscientes financeiramente e que entendem que investimentos no mercado acionário estão sujeitos a flutuaçõespor vezes, agressivas. Nesse sentido, não se observou uma perda expressiva de recursos como documentado por Falato et al (2021). Além disso da Figura 2 pode-se perceber que no período pré-crise houve uma captação líquida bastante forte, ao mesmo tempo em que, no período de crash e no período de recuperação, a captação líquida caiu bastante, ficando mais centrada em torno do zero do que anteriormente.…”

Section: Todosunclassified

Desempenho e risco de fundos de investimento em ações brasileiros no contexto da pandemia de COVID-19

Teles¹,

Lima²,

Silva³

et al. 2022

Rev. Cat. Cien. Cont.

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O objetivo da pesquisa foi analisar como os fundos de investimento em ações brasileiros se comportaram durante o período da Covid-19. A análise foi dividida em 3 sub-períodos: (i) pré-crise (2019-10-03 a 2020-01-31); (ii) crash (2020-02-19 a 2020-03-23); (iii) e recuperação (2020-03-24 a 2020-04-30). Os principais resultados mostraram que durante o período de crash em todas as categorias mais de 50% dos fundos obtiveram retorno superior ao IBRX100. Porém, no período de recuperação o cenário se inverte e a grande maioria dos fundos passa a ter um desempenho inferior ao do índice. No entanto, quando o desempenho é analisado sob a óptica de modelos multifatoriais de risco, é possível identificar geração de alfa positiva durante o período pré-crise e negativa (destruição de valor) durante o período de crash. Além disso, ao examinar os fluxos de investimento, pode-se perceber que não houve um fenômeno de “corrida” para realizar o resgate da cota. Na realidade, durante quase todo o período analisado, as captações excederam os resgates. Isso pode indicar que o investidor cotista de fundos está mais educado financeiramente e que agiu com mais cautela ao aguardar um momento menos turbulento. O artigo conclui que a indústria vinha de um bom desempenho no período pré-crise, que foi interrompido por um período de destruição de valor durante o momento de maior turbulência e que, por fim, durante o período de recuperação, o desempenho foi inferior ao do índice de mercado, mas sem geração ou destruição significativa de valor.

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Financial fragility in the COVID-19 crisis: The case of investment funds in corporate bond markets

Cited by 169 publications

References 33 publications

Performance and risk of Brazilian equity mutual funds in the context of the covid-19 pandemic

Performance and risk of Brazilian equity mutual funds in the context of the covid-19 pandemic

Assessment of sustainable green financial environment: the underlying structure of monetary seismic aftershocks of the COVID-19 pandemic

Desempenho e risco de fundos de investimento em ações brasileiros no contexto da pandemia de COVID-19

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