Covid-19, Financial Market Vulnerabilities and Dynamics Monetary Policy: Comparative Analysis

Sri Andaiyani (), Ariodillah Hidayat (), Fida Muthia () and Dirta Pratama Atiyatna ()
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Sri Andaiyani: Universitas Sriwijaya, Indonesia
Ariodillah Hidayat: Universitas Sriwijaya, Indonesia
Fida Muthia: Universitas Sriwijaya, Indonesia
Dirta Pratama Atiyatna: Universitas Sriwijaya, Indonesia

Management and Economics Review, 2022, vol. 7, issue 2, 159-172

Abstract: This study aims to analyze a comparative study of the response of the Indonesian and Malaysian Financial Markets to the dynamics of Monetary Policy implemented during the COVID-19 Pandemic during January 2019 to June 2021. This study builds three e.i interbank money market, bond market, and stock market. The methodology of this study is Ordinary Least Square (OLS). The result shows that COVID-19 has no effect on financial markets, either in Indonesia or in Malaysia. However, when the lockdown was implemented in Malaysia, it had a significant effect on the Malaysian bond market. Furthermore, monetary policy with interest rate instruments has a significant and negative effect on the stock market in Indonesia. The monetary policy through the reserve ratio has a significant and positive effect on the Malaysian bond market. It suggests that there are differences in the dynamics of monetary between Indonesia and Malaysia so that they have different impacts on their respective financial markets.

Keywords: monetary policy; financial market; stock market; interest rate (search for similar items in EconPapers)
JEL-codes: E40 E44 E52 (search for similar items in EconPapers)
Date: 2022
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