COVID-19 Pandemic, Health Crisis and Financial Stability

Ebikabowei Biedomo Aduku (), Ifeoma Augusta Eboh and Johnson Nchege ()
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Ebikabowei Biedomo Aduku: Nnamdi Azikwe University
Ifeoma Augusta Eboh: Nnamdi Azikwe University
Johnson Nchege: University of Nigeria

Chapter Chapter 5 in COVID-19 Pandemic and Global Inequality, 2023, pp 71-87 from Springer

Abstract: Abstract This chapter's prime intention is to examine the impact of the COVID-19 pandemic and the COVID-19-related health crisis on financial stability. The COVID-19 pandemic is proxied by the COVID-19 confirmed cases, while the COVID-19-related health crisis is measured by the number of COVID-19-related confirmed deaths. Financial stability, on the other hand, is measured using the liquidity ratio, banks loan to deposit ratio, government debt to GDP, and banks’ credit to the economy. Daily datasets that cover from 23/03/2020 to 23/03/2022, drawn from the Nigerian Center for Disease Control (NCDC) and the Central Bank of Nigeria (CBN) statistical bulletin is analyzed using the Autoregressive Distributed Lag (ARDL) technique. The empirical result shows that the COVID-19 confirmed cases and the COVID-19-related deaths have a negative and significant impact on liquidity rate, and a positive and significant impact on banks loan to deposit ratio, government debt to GDP and banks’ credit to the economy in the long and short run. The findings also showed that the liquidity rate fell as the health crisis increased due to COVID-19, but the bank loan-to-deposit ratio, government loan to GDP, and credit to the economy increased. There should be a provision for larger government support for the players of the financial sector including liquidity and other supports by the central bank, expansion of deposit insurance coverage, protection schemes and guarantees, and capital injections.

Keywords: COVID-19 pandemic; Health crisis; GDP; Disease control; Financial stability; Liquidity; ARDL (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-4405-7_5

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DOI: 10.1007/978-981-99-4405-7_5

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