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Openness, economic uncertainty, government responses, and international financial market performance during the coronavirus pandemic

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  • Huynh, Nhan
  • Dao, Anh
  • Nguyen, Dat

Abstract

This study explores the impact of COVID-19 on financial markets controlled by macroeconomic and administrative factors. As natural experimentation, we employ panel data analysis to test 50 stock market indices from January 01 to August 20, 2020. The findings suggest daily growth of COVID-19 confirmed cases have considerable adverse effects on stock returns and positive impacts on investment risks across markets. The government prompt interventions offset adverse impacts of the pandemic. Market reactions to the outbreak and authority responses information are more momentous in more developed economies due to their better information efficiency. The country-specific features of globalisation, uncertainty, healthcare system readiness, and economic development levels appear to have substantial impacts on equity market reactions. Financial markets in countries with higher levels of globalisation, economic policy and financial uncertainty experience more chaos during the pandemic. While those hostile effects are less significant in countries with robust healthcare systems.

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  • Huynh, Nhan & Dao, Anh & Nguyen, Dat, 2021. "Openness, economic uncertainty, government responses, and international financial market performance during the coronavirus pandemic," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000800
    DOI: 10.1016/j.jbef.2021.100536
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    Cited by:

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    4. Lang, Chunlin & Hu, Yang & Corbet, Shaen & Hou, Yang (Greg), 2024. "Tail risk connectedness in G7 stock markets: Understanding the impact of COVID-19 and related variants," Journal of Behavioral and Experimental Finance, Elsevier, vol. 41(C).
    5. Huynh, Nhan, 2024. "Non-native players in the domestic league: Foreign penetration and domestic banking sector in an emerging market," Pacific-Basin Finance Journal, Elsevier, vol. 84(C).
    6. Li, Shi & Li, Meng & Fu, Rongsha, 2024. "A sustainable pandemic response: The impact of COVID-19 vaccination coverage on economic policy uncertainty," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 316-332.
    7. Vu, Phuong Thi Thu & Huynh, Nhan & Phan, Hoa & Hoang, Hanh, 2023. "Financial earthquakes and aftershocks: From Brexit to Russia-Ukraine conflict and the stability of European banks," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    8. M. Yu. Malkina, 2022. "The Resilience of the Russian Regional Economies to the 2020 Pandemic," Regional Research of Russia, Springer, vol. 12(3), pages 309-320, September.
    9. Inzamam UI Haq & Hira Nadeem & Apichit Maneengam & Saowanee Samantreeporn & Nhan Huynh & Thasporn Kettanom & Worakamol Wisetsri, 2022. "Do Rare Earths and Energy Commodities Drive Volatility Transmission in Sustainable Financial Markets? Evidence from China, Australia, and the US," IJFS, MDPI, vol. 10(3), pages 1-22, September.
    10. Mohamed Albaity & Ray Saadaoui Mallek & Hasan Mustafa, 2022. "Bank Stock Return Reactions to the COVID-19 Pandemic: The Role of Investor Sentiment in MENA Countries," Risks, MDPI, vol. 10(2), pages 1-15, February.
    11. Lin, Ling & Jiang, Yong & Zhou, Zhongbao, 2024. "Asymmetric spillover and network connectedness of policy uncertainty, fossil fuel energy, and global ESG investment," Applied Energy, Elsevier, vol. 368(C).
    12. Huynh, Nhan, 2023. "Unemployment beta and the cross-section of stock returns: Evidence from Australia," International Review of Financial Analysis, Elsevier, vol. 86(C).
    13. Huynh, Nhan & Phan, Hoa, 2023. "Emotions in the crypto market: Do photos really speak?," Finance Research Letters, Elsevier, vol. 55(PB).
    14. Huynh, Nhan & Le, Quynh Nga & Tran, Quang Thien, 2024. "Firm-level political risk and intellectual capital investment: Does managerial ability matter?," International Review of Financial Analysis, Elsevier, vol. 91(C).
    15. Mo, Bin & Zeng, Haiyu & Meng, Juan & Ding, Shaokai, 2024. "The connectedness between uncertainty and exchange rates of oil import countries: new evidence from time and frequency perspective," Resources Policy, Elsevier, vol. 88(C).

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    More about this item

    Keywords

    COVID-19; Stock returns; Government responses; Openness; Healthcare expenditure; Economic Policy Uncertainty; Financial Uncertainty;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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