The financial pandemic: COVID-19 and policy interventions on rational and irrational markets. [Working paper]

Shanaev, Savva; Shuraeva, Arina; Ghimire, Binam

Abstract

Financial markets are useful indicators of public beliefs and dispersed knowledge on future outcomes and policy efficiency, especially in periods of uncertainty. 51 national stock markets successfully absorb publicly available information regarding COVID-19 and anticipate policy measures being taken to address the pandemic. The financial markets imply national lockdown policies, as well as monetary or fiscal stimuli, are counterproductive measures while targeted regional lockdowns can be effective. The fundamental effect of the pandemic is relatively low, sentiment and irrational panic play a greater role, while the most significant drivers of negative stock returns are policy interventions.

Citation

SHANAEV, S., SHURAEVA, A. and GHIMIRE, B. 2020. The financial pandemic: COVID-19 and policy interventions on rational and irrational markets. [Working paper]. SSRN [online]. Available from: https://doi.org/10.2139/ssrn.3589557

• Working Paper Type: Working Paper
• Deposit Date: Aug 20, 2024
• Publicly Available Date: Aug 20, 2024
• Keywords: COVID-19; Markets; Financial markets; Efficient market hypothesis (EMH)
• Public URL: https://rgu-repository.worktribe.com/output/2439578
• Publisher URL: https://doi.org/10.2139/ssrn.3589557