Journal
JOURNAL OF INTERNATIONAL FINANCIAL MARKETS INSTITUTIONS & MONEY
Volume 71, Issue -, Pages -Publisher
ELSEVIER
DOI: 10.1016/j.intfin.2021.101284
Keywords
COVID-19; Economy; Financial immunity; Fundamentals; Government interventions; Policy responses; Healthcare; International stock markets; Institutions; National culture; Governance; Novel coronavirus
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Funding
- National Science Centre of Poland [2016/23/B/HS4/00731]
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The study found that countries with low unemployment rates, conservative investment policies, and low valuations relative to expected profits tend to have stock markets that are more financially immune, and that firm government policy responses also support stock markets during the pandemic.
What determines a country's financial immunity to a global pandemic? To answer this question, we investigate the behavior of 67 equity markets around the world during the COVID-19 outbreak in 2020. We consider a multidimensional data set that includes factors from finance, economics, demographics, technological development, healthcare, gover-nance, culture, and law. Our study also accounts for government interventions, such as containment and closure policies, and economic stimuli. We apply machine learning tech-niques, panel regression, and factor analysis to ascertain sources of financial immunity to the coronavirus pandemic. Our findings demonstrate that stock markets in countries with low unemployment rates and populated with firms with conservative investment policies and low valuations relative to expected profits tend to be more immune to the healthcare crisis. We also find that firm government policy responses tend to support stock markets in times of the pandemic. (c) 2021 Elsevier B.V. All rights reserved.
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