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COVID-19 And the african financial markets : Less infection, less economic impact ?

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  • Del Lo, Gaye
  • Basséne, Théophile
  • Séne, Babacar

Abstract

Has the relatively low number of COVID-19 cases and deaths saved Africa from the disease’s economic and financial consequences ? This article assesses the impact of the pandemic on the volatility of major African stock markets using a panel data model. Like other financial markets worldwide, Africa’s have been characterised by increased volatility during the pandemic. The markets appear to respond to the external shocks caused by the health crisis, and Google search volume activity related to the COVID-19 virus, which is treated here as a proxy for panic and fear, is associated with an increase in market volatility of around 7%. For health data, only increases in confirmed cases appear to impact the stability of African markets, and the relatively low fatality rate has had no influence on market dynamics. However, Political responses are associated with a drop in volatility, while the fear of global financial markets exacerbates it. These results have several implications in terms of risk management.

Suggested Citation

  • Del Lo, Gaye & Basséne, Théophile & Séne, Babacar, 2022. "COVID-19 And the african financial markets : Less infection, less economic impact ?," Finance Research Letters, Elsevier, vol. 45(C).
    • Handle: RePEc:eee:finlet:v:45:y:2022:i:c:s1544612321002294
    DOI: 10.1016/j.frl.2021.102148
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    References listed on IDEAS

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    Cited by:

    1. Zhang, Pengcheng & Xu, Kunpeng & Qi, Jiayin, 2023. "The impact of regulation on cryptocurrency market volatility in the context of the COVID-19 pandemic — evidence from China," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 222-246.
    2. Adeabah, David & Abakah, Emmanuel Joel Aikins & Tiwari, Aviral Kumar & Hammoudeh, Shawkat, 2023. "How far have we come and where should we go after 30+ years of research on Africa's emerging financial markets? A systematic review and a bibliometric network analysis," Emerging Markets Review, Elsevier, vol. 55(C).
    3. Bai, Min & Ho, Ly, 2022. "Corporate social performance and firm debt levels: Impacts of the covid-19 pandemic and institutional environments," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Lo, Gaye-Del & Marcelin, Isaac & Bassène, Théophile & Sène, Babacar, 2022. "The Russo-Ukrainian war and financial markets: the role of dependence on Russian commodities," Finance Research Letters, Elsevier, vol. 50(C).
    5. Zhang, Pengcheng & Kong, Deli & Xu, Kunpeng & Qi, Jiayin, 2024. "Global economic policy uncertainty and the stability of cryptocurrency returns: The role of liquidity volatility," Research in International Business and Finance, Elsevier, vol. 67(PB).

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    More about this item

    Keywords

    Coronavirus; Stock market; Volatility; Google trends; Panel data;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

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