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Yassine Kirat and Djamel Kirat
''Impact assessment of the COVID-19 pandemic on financial markets''
( 2022, Vol. 42 No.2 )
This article analyses the immediate consequences of the COVID-19 pandemic on financial markets in some of the hardest-hit countries. We first show that stock-market index returns reacted strongly and negatively to the COVID-19 pandemic. We then assess the impact of the demand-side accompanying economic measures, such as income support to cover salaries and debt relief for households, in mitigating this effect. Countries that introduced more generous income-support policies were better able to counter the pandemic's short-term harmful effects on financial markets. We calculate the potential country-level financial losses due to COVID-19 over the five first months of 2020 to have been between -40% and -26%. Once the mitigating effects of economic policy are taken into account, the actual financial loss is estimated at between -5% and -7% for France, Germany and the UK. These financial losses are higher elsewhere, with some exceeding -30%, especially in countries without income-support policies.
Keywords: Financial markets, Public-policy assessment, Panel data, Pandemics
JEL: I1 - Health: General
G1 - General Financial Markets
Manuscript Received : Sep 24 2021 Manuscript Accepted : Jun 30 2022

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