IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-21-00897.html

Impact assessment of the COVID-19 pandemic on financial markets

Author

Listed:
  • Yassine Kirat

    (University of Orléans, LEO)

  • Djamel Kirat

    (University of Orléans, LEO)

Abstract

This article analyses the immediate consequences of the COVID-19 pandemic on financial markets in some of the hardest-hit countries. We first show that stock-market index returns reacted strongly and negatively to the COVID-19 pandemic. We then assess the impact of the demand-side accompanying economic measures, such as income support to cover salaries and debt relief for households, in mitigating this effect. Countries that introduced more generous income-support policies were better able to counter the pandemic's short-term harmful effects on financial markets. We calculate the potential country-level financial losses due to COVID-19 over the five first months of 2020 to have been between -40% and -26%. Once the mitigating effects of economic policy are taken into account, the actual financial loss is estimated at between -5% and -7% for France, Germany and the UK. These financial losses are higher elsewhere, with some exceeding -30%, especially in countries without income-support policies.

Suggested Citation

  • Yassine Kirat & Djamel Kirat, 2022. "Impact assessment of the COVID-19 pandemic on financial markets," Economics Bulletin, AccessEcon, vol. 42(2), pages 667-677.
    • Handle: RePEc:ebl:ecbull:eb-21-00897
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/Pubs/EB/2022/Volume42/EB-22-V42-I2-P56.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    2. Daron Acemoglu & Victor Chernozhukov & Ivàn Werning & Michael D. Whinston, 2020. "A Multi-Risk SIR Model with Optimally Targeted Lockdown," CeMMAP working papers CWP14/20, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    3. Ichev, Riste & Marinč, Matej, 2018. "Stock prices and geographic proximity of information: Evidence from the Ebola outbreak," International Review of Financial Analysis, Elsevier, vol. 56(C), pages 153-166.
    4. Bash, Ahmad & Alsaifi, Khaled, 2019. "Fear from uncertainty: An event study of Khashoggi and stock market returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 23(C), pages 54-58.
    5. Li, Kun, 2018. "Reaction to news in the Chinese stock market: A study on Xiong’an New Area Strategy," Journal of Behavioral and Experimental Finance, Elsevier, vol. 19(C), pages 36-38.
    6. M. Hashem Pesaran, 2021. "General diagnostic tests for cross-sectional dependence in panels," Empirical Economics, Springer, vol. 60(1), pages 13-50, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Djamel KIRAT & Yassine KIRAT, 2020. "An international Comparison of the Economic Impacts of the COVID-19 Pandemic," LEO Working Papers / DR LEO 2818, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    2. Terver Kumeka & Oluwatosin Adeniyi, 2023. "Stock markets response to contagious disease: Evidence on the impact of COVID‐19 in the three worst hit African economies," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4476-4499, October.
    3. Al-Awadhi, Abdullah M. & Alsaifi, Khaled & Al-Awadhi, Ahmad & Alhammadi, Salah, 2020. "Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns," Journal of Behavioral and Experimental Finance, Elsevier, vol. 27(C).
    4. Alomari, Mohammad & Al Rababa'a, Abdel Razzaq & Ur Rehman, Mobeen & Power, David M., 2022. "Infectious diseases tracking and sectoral stock market returns: A quantile regression analysis," The North American Journal of Economics and Finance, Elsevier, vol. 59(C).
    5. Peppel-Srebrny, Jemima, 2021. "Not all government budget deficits are created equal: Evidence from advanced economies' sovereign bond markets," Journal of International Money and Finance, Elsevier, vol. 118(C).
    6. Liu, Duan & Yu, Nizhou & Wan, Hong, 2022. "Does water rights trading affect corporate investment? The role of resource allocation and risk mitigation channels," Economic Modelling, Elsevier, vol. 117(C).
    7. Carmen Broto & Javier Díaz-Cassou & Aitor Erce-Domínguez, 2008. "The Sources of Capital Flows Volatility: Empirical Evidence for Emerging Countries," Money Affairs, CEMLA, vol. 0(1), pages 93-128, January-J.
    8. Teng, Meixuan & Burke, Paul J. & Liao, Hua, 2019. "The demand for coal among China's rural households: Estimates of price and income elasticities," Energy Economics, Elsevier, vol. 80(C), pages 928-936.
    9. Ayhan, Fatih & Elal, Onuray, 2023. "The IMPACTS of technological change on employment: Evidence from OECD countries with panel data analysis," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    10. Dongwon Lee & Yu-chin Chen, 2014. "What Makes a Commodity Currency?," Working Papers 201420, University of California at Riverside, Department of Economics.
    11. Chimere O. Iheonu, 2019. "Governance and Domestic Investment in Africa," Working Papers 19/001, European Xtramile Centre of African Studies (EXCAS).
    12. Carmen Broto & Javier Díaz-Cassou & Aitor Erce-Domínguez, 2008. "Measuring and explaining the volatility of capital flows towards emerging countries," Working Papers 0817, Banco de España.
    13. Skare, Marinko & Gavurova, Beata & Sinkovic, Dean, 2023. "Regional aspects of financial development and renewable energy: A cross-sectional study in 214 countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1142-1157.
    14. Mamba, Essotanam & Ali, Essossinam, 2022. "Do agricultural exports enhance agricultural (economic) growth? Lessons from ECOWAS countries," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 257-267.
    15. Polloni-Silva, Eduardo & Moreno, Rosina & Moralles, Herick Fernando, 2025. "Technological content and institutional quality of FDI: Investigating the effects on the environment in Brazil," International Business Review, Elsevier, vol. 34(6).
    16. Chulan Lasantha Kukule Nawarathna, 2025. "The Nexus Between Female Labor Force Participation and Economic Development: A Global Study Across the Phases of Demographic Dividends," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(15), pages 426-449, April.
    17. Gren, Ing-Marie & Carlsson, Mattias, 2012. "Revealed payments for biodiversity protection in Swedish forests," Forest Policy and Economics, Elsevier, vol. 23(C), pages 55-62.
    18. Wasi Ul Hassan Shah & Rizwana Yasmeen & Muddassar Sarfraz & Larisa Ivascu, 2023. "The Repercussions of Economic Growth, Industrialization, Foreign Direct Investment, and Technology on Municipal Solid Waste: Evidence from OECD Economies," Sustainability, MDPI, vol. 15(1), pages 1-14, January.
    19. Stéphane Mbiankeu Nguea & Hervé Kaffo Fotio, 2025. "The heterogeneous effects of renewable energy, urbanization and democracy on CO2 emissions: Does economic growth matter?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(4), pages 8835-8861, April.
    20. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität [Public Debt and Debt Mentality]," MPRA Paper 79432, University Library of Munich, Germany.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • G1 - Financial Economics - - General Financial Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-21-00897. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.