IDEAS home Printed from https://ideas.repec.org/a/eee/finsta/v81y2025ics1572308925001081.html

Unpacking the crisis: Impact of COVID-19 on global equity flows

Author

Listed:
  • Li, Zhisheng
  • Lin, Bingxuan
  • Liu, Zhouyi
  • Yüksel, H. Zafer

Abstract

This paper examines how the COVID-19 pandemic affected international equity flows through two different channels: a direct channel, capturing the real economic disruptions caused by rising infection rates, and an indirect channel, reflecting pandemic-related panic and uncertainty amplified by media coverage. Using high-frequency country/regional-level data for 66 economies—26 advanced and 40 emerging economies—between January 2020 and December 2022, we disentangle and quantify these two effects. Compared to the direct effect of pandemic, we show that the indirect panic-driven effect is stronger, and not simply a reflection of pandemic severity. The negative impact of panic on equity flows is more pronounced in the early months of 2020, and is partially offset by government interventions—particularly in advanced economies—while similar measures in emerging markets have limited impact. Taken together, our findings highlight the importance of distinguishing between real economic shocks and sentiment-driven dynamics of the pandemic, and offer practical insights for policymakers in preparing for future crisis.

Suggested Citation

  • Li, Zhisheng & Lin, Bingxuan & Liu, Zhouyi & Yüksel, H. Zafer, 2025. "Unpacking the crisis: Impact of COVID-19 on global equity flows," Journal of Financial Stability, Elsevier, vol. 81(C).
    • Handle: RePEc:eee:finsta:v:81:y:2025:i:c:s1572308925001081
    DOI: 10.1016/j.jfs.2025.101479
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1572308925001081
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jfs.2025.101479?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:eee:finsta:v:81:y:2025:i:c:s1572308925001081. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jfstabil .

    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.