Policy responses to COVID-19 and stock market reactions - An international evidence

Deng, Tianjie; Xu, Tracy; Lee, Young-Jin

doi:10.1016/j.jeconbus.2021.106043

Cited by 26 publications

(28 citation statements)

References 53 publications

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“…We also provide evidence to demonstrate the positive impact of COVID-19 containment measures stringency on stock market performance during the first wave of COVID-19 only. Our results support those by Aggarwal et al (2021), Haroon and Rizvi (2020), Deng et al (2021) that depict positive stock market reaction to COVID-19 containment measures. These results signify the fact that investors view containment measures as necessary steps toward slowing down the virus and therefore help economies to bounce back from COVID-19-induced recessions.…”

Section: Discussionsupporting

confidence: 89%

“…The literature on how different government containment measures such as lockdowns, closure of schools affect stock markets has been gradually growing. This has created two opposing schools of thought on the subject with each group advocating for either improving or deteriorating stock market performance (Deng et al, 2021). The advocates for improved stock market as a result of COVID-19 containment measures imposition argue that growing number of cases and deaths causes panic among investors resulting into panic selling (Aggarwal et al, 2021;Rizvi, 2020 Deng et al, 2021).…”

Section: 2mentioning

confidence: 99%

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Stock market reactions to COVID-19 shocks: do financial market interventions walk the talk?

Marobhe

Kansheba

2022

CFRI

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PurposeFollowing the COVID-19 outbreak, various economies imposed different financial interventions as part of initiatives to cushion their stock markets from deteriorating performance. Our article examines the effectiveness of these interventions in protecting stock markets during the pandemic.Design/methodology/approachThe authors employ Panel Vector Autoregression to model the magnitude and timing of shocks from COVID-19 to stock markets. The fixed effects regression is then utilized to assess the role of financial interventions in protecting stock markets during COVID-19. The study uses daily stock index returns as well COVID-19 containment measures stringency index data from 39 countries ranging from 2nd January 2020 to 30th September 2021.FindingsOur findings firstly reveal a significant positive stock market reaction to country-level containment measures stringency but only during the first wave of COVID-19. We secondly show that stock market functioning interventions that include short selling bans and circuit breakers amplify the positive effects of COVID-19 containment measures stringency on stock market performance.Research limitations/implicationsThe authors stress the need for policymakers and regulators to timely intervene in protecting economies and stock markets during crises such as COVID-19 in order to reduce panic among investors. Moreover, investors should adjust their portfolios by investing in stocks from countries that have proper financial market interventions in place.Originality/valueDespite growing body of literature on COVID-19 and stock market performance, there is limited evidence on the role of financial sector interventions to cushion stock markets during tumultuous conditions caused by the pandemic.

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Section: Discussionsupporting

confidence: 89%

Section: 2mentioning

confidence: 99%

Stock market reactions to COVID-19 shocks: do financial market interventions walk the talk?

Marobhe

Kansheba

2022

CFRI

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“…The reason is probably that these researchers only considered health policies, but we consider the oxCGRT index. But our results confirm Guven et al (2022) and Deng et al, (2022).…”

Section: Discussionsupporting

confidence: 75%

“…Several studies have been conducted on the importance of the impact of government policies in the COVID-19 crisis on the stock market (e.g. Zaremba et al, 2021;Owjimehr and Samadi, 2022;Deng et al, 2022). We know that the degree of policy responses of countries has not been the same during the COVID-19 period.…”

Section: Introductionmentioning

confidence: 99%

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Uncertainty governance in the stock market during the COVID-19: evidence of the strictest economies in the world

Owjimehr

Dastfroosh

2022

CFRI

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PurposeAccording to the Government Response tracker (oxCGRT) index, the strictest policy responses to the coronavirus pandemic from January 2020 to May 2022 belong to Italy, China, Hong Kong, Greece, Austria, Peru, Singapore and Malaysia. The main question is: “this level of strictness has been able to reduce the uncertainty of the stock market?”Design/methodology/approachTo achieve this goal, the authors investigated the effect of oxCGRT index, and the growth rate of COVID-19 confirms cases on stock market uncertainty from January 2020 to May 2022 in the GARCH, EGARCH and TGARCH models.FindingsAmong these countries, the oxCGRT index has reduced uncertainty in the stock market only in Malaysia and Singapore. This result says an appropriate pattern of applying government policy responses is more important than the degree of stringency.Originality/valueThe study will contribute to the existing literature by examining the impact of the comprehensive oxCGRT index on the uncertainty of the stock market.

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Topics of green credit policy in China based on text mining and their impact on the stock returns of heavily polluting enterprises

Bai,

Zhong

2024

Environ Dev Sustain

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Policy responses to COVID-19 and stock market reactions - An international evidence

Cited by 26 publications

References 53 publications

Stock market reactions to COVID-19 shocks: do financial market interventions walk the talk?

Stock market reactions to COVID-19 shocks: do financial market interventions walk the talk?

Uncertainty governance in the stock market during the COVID-19: evidence of the strictest economies in the world

Topics of green credit policy in China based on text mining and their impact on the stock returns of heavily polluting enterprises

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