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Financial Market Responses to Government COVID-19 Pandemic Interventions: Empirical Evidence from South-East and East Asia

Author

Listed:
  • Hai Anh La

    (National Centre for Social and Economic Modelling, University of Canberra, Australia)

  • Riyana Miranti

    (National Centre for Social and Economic Modelling, University of Canberra, Australia)

Abstract

This study investigates the impact of various government interventions on the spread of COVID-19 as well as stock markets in South-East and East Asia. It finds that stricter interventions – including gathering restrictions, public event cancellations, and mask requirements – helped mitigate the severity of the pandemic significantly in the region. Total border closures had a moderate effect on flattening COVID-19 spread, especially during the onset of the pandemic. Other policies, such as school closures or stay-at-home orders, worked effectively later in the pandemic. The study also shows evidence of herding behaviours in regional stock markets during the pandemic. School closures, gathering restrictions, stay-at-home orders, domestic travelling bans, robust testing policies, and government income support programmes tended to reduce herding behaviour. More stock market integration is found during the onset of the pandemic, compared to the periods before and later in the pandemic, implying the short-term impact of a sudden shock from COVID-19.

Suggested Citation

  • Hai Anh La & Riyana Miranti, 2021. "Financial Market Responses to Government COVID-19 Pandemic Interventions: Empirical Evidence from South-East and East Asia," Working Papers DP-2021-07, Economic Research Institute for ASEAN and East Asia (ERIA).
    • Handle: RePEc:era:wpaper:dp-2021-07
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    File URL: https://www.eria.org/uploads/media/discussion-papers/ERIA-Research-on-COVID-19/Financial-Market-Responses-to-Government-COVID-19-Pandemic-Interventions_Empirical-Evidence-from-South-East-and-East-Asia.pdf
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    Cited by:

    1. Antonio Fanelli, 2021. "How ASEAN Can Improve Its Response to the Economic Crisis Generated by the COVID-19 Pandemic: Inputs drawn from a comparative analysis of the ASEAN and EU responses," Working Papers DP-2021-08, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Ahmad, Wasim & Chahal, Rishman Jot Kaur & Rais, Shirin, 2022. "Understanding the impact of the coronavirus outbreak on the economic integration of ASEAN countries," LSE Research Online Documents on Economics 124068, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    COVID-19; stock markets; minimum spanning trees; government interventions;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management

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