COVID-19, government policy responses, and stock market liquidity around the world: A note

Unprecedented non-pharmaceutical interventions targeted to curb the spread of COVID-19 exerted a dramatic impact on the global economy and financial markets. This study is the first attempt to investigate the influence of these government policy responses on global stock market liquidity. To this end, we examine daily data from 49 countries for the period January-April 2020. We demonstrate that the impact of the interventions is limited in scale and scope. Workplace and school closures deteriorate liquidity in emerging markets, while information campaigns on the novel coronavirus facilitate trading activity.

Automated summary

The study shows that the impact of government non-pharmaceutical interventions during the COVID-19 pandemic on global stock market liquidity is limited. The closure of workplaces and schools worsens liquidity in emerging markets, while information campaigns on the novel coronavirus facilitate trading activity.