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The Impact Of Coronavirus Pandemic On The Stock Market Reaction In The Banking Sector. The Role Or Regulatory And Supervisory Framework Across European Union Members

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  • ANDREEA MAURA BOBICEANU

    (BabeÈ™-Bolyai University, Postal Adress: Teodor Mihali Street, Nr. 58-60, Cluj-Napoca 400591, Romania)

  • SIMONA NISTOR

    (BabeÈ™-Bolyai University, Postal Adress: Teodor Mihali Street, Nr. 58-60, Cluj-Napoca 400591, Romania)

Abstract

The purpose of this paper is to assess the impact of COVID-19 outbreak upon the stock prices of the banking sector in the European Union evaluating the responses of banks from different jurisdictions with different regulatory policies and tax regimes. Using an event study technique, we examine the abnormal returns across a significant number of banks. The results show a broadly negative response of the investors to the COVID-19 pandemic official announcement. However, we found significant evidence of differences between banks form distinct jurisdictions. The investors have a stronger negative reaction for the banks from non-euro area, as well as for the banks from peripheral and semi peripheral countries. From a regulatory perspective, the investors have an enhanced adverse reaction for banks in jurisdictions where the activities restrictions and supervisory powers are lower, and where capital requirements are tighter.

Suggested Citation

  • Andreea Maura Bobiceanu & Simona Nistor, 2021. "The Impact Of Coronavirus Pandemic On The Stock Market Reaction In The Banking Sector. The Role Or Regulatory And Supervisory Framework Across European Union Members," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 28, pages 41-64, December.
    • Handle: RePEc:aic:revebs:y:2021:j:28:bobiceanua
    DOI: 10.47743/rebs-2021-2-0002
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    References listed on IDEAS

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    4. Goodell, John W., 2020. "COVID-19 and finance: Agendas for future research," Finance Research Letters, Elsevier, vol. 35(C).
    5. Rizwan, Muhammad Suhail & Ahmad, Ghufran & Ashraf, Dawood, 2020. "Systemic risk: The impact of COVID-19," Finance Research Letters, Elsevier, vol. 36(C).
    6. Donald P. Morgan & Stavros Peristiani & Vanessa Savino, 2014. "The Information Value of the Stress Test," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(7), pages 1479-1500, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    bank stock prices; CDS spreads; event study; abnormal returns;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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