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The asymmetric effect of COVID-19 outbreak, commodities prices and policy uncertainty on financial development in China: evidence from QARDL approach

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  • Chun Jiang
  • Yadi Zhang
  • Ummara Razi
  • Hafiz Waqas Kamran

Abstract

COVID-19 epidemic has brought uncertainty to each sector of the global economy, including the financial sector. The widely spread disease has a drastic effect, which massively created health and financial crisis and virtually pushed the economy to the brink of recession. The study focused on the financial development of China during the COVID-19 pandemic and analyzed the long-term and short-term impact of COVID-19, oil prices, gold prices, and global economic policy uncertainty on the financial development of the country. The QARDL model, Wald test, and Granger causality tests are employed to assess the daily data of variables from January 1, 2020, to March 15, 2021. The study's empirical results revealed that an increase in the number of COVID-19 registered patients has an unprecedented negative effect on financial development, whereas the oil prices co-moved with the financial performance. On the other hand, gold prices and global economic policy uncertainty are negatively correlated with financial development. This study offers various policy recommendations to help the investors, government, and decision-makers to make better decisions for the improvement of the financial development of China.

Suggested Citation

  • Chun Jiang & Yadi Zhang & Ummara Razi & Hafiz Waqas Kamran, 2022. "The asymmetric effect of COVID-19 outbreak, commodities prices and policy uncertainty on financial development in China: evidence from QARDL approach," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2003-2022, December.
    • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:2003-2022
    DOI: 10.1080/1331677X.2021.1930092
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    Cited by:

    1. Ummara Razi & Calvin W. H. Cheong & Sahar Afshan & Arshian Sharif, 2025. "The ripple effects of energy price volatility on equity and debt markets: a Morlet wavelet analysis," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 197-223, March.
    2. Zhaohan Wang & Kishwar Ali & Sami Ullah, 2025. "Revisiting natural resources and financial development nexus in China under the lens of time‐frequency approach," Natural Resources Forum, Blackwell Publishing, vol. 49(1), pages 541-560, February.
    3. Di Jin & Muhammad Wasif Zafar, 2025. "Fostering green progress: The dual influence of natural resource rent and human capital on emerging economy energy transition," Natural Resources Forum, Blackwell Publishing, vol. 49(1), pages 656-676, February.
    4. Liang, Jinhua & Ullah, Inam, 2024. "Analysis of crude oil and gold price volatility and their correlation during socio-economic crises," Resources Policy, Elsevier, vol. 98(C).
    5. Zhang, Zhihe & Hou, Yufei & Zhang, Zesen & Li, Mulin, 2023. "Natural resources, carbon neutrality, and fiscal federalism: Implications for G7 countries amid rising Covid-19 concerns," Resources Policy, Elsevier, vol. 87(PA).

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