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The impact of COVID-19 on analysts’ sentiment about the banking sector

Author

Listed:
  • Alicia Aguilar

    (Banco de España)

  • Diego Torres

    (Banco de España)

Abstract

The use of quantitative tools to analyse the huge amount of qualitative information has been acquiring increasing importance. Market participants and, of course, Central Banks have been involved in this trend. The vast majority of qualitative data can be qualified as non-structured and refers mainly to news, reports or another kind of texts. Its transformation into structured data can improve the availability of information and hence, decision making. This article applies sentiment analysis tools to text data in order to quantify the impact of Covid-19 on the analysts’ opinions. Using this methodology, it is possible to transform qualitative non-structured data into a quantitative index that can be used to compare reports from different periods and countries. The results show the pandemic worsens banking sentiment in Europe, which coincides with higher uncertainty in the stock market. There are also regional differences in the decline in sentiment as well as higher divergence is observed across opinions.

Suggested Citation

  • Alicia Aguilar & Diego Torres, 2021. "The impact of COVID-19 on analysts’ sentiment about the banking sector," Working Papers 2124, Banco de España, revised Jun 2021.
    • Handle: RePEc:bde:wpaper:2124
    as

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    References listed on IDEAS

    as
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    3. Price, S. McKay & Doran, James S. & Peterson, David R. & Bliss, Barbara A., 2012. "Earnings conference calls and stock returns: The incremental informativeness of textual tone," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 992-1011.
    4. Paul C. Tetlock, 2007. "Giving Content to Investor Sentiment: The Role of Media in the Stock Market," Journal of Finance, American Finance Association, vol. 62(3), pages 1139-1168, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sentiment analysis; COVID-19 impact; European banking; analysts’ estimates;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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