COVID-19 pension raids and sovereign risk

Jaime Bastías and José L. Ruiz

International Review of Economics & Finance, 2025, vol. 101, issue C

Abstract: Chile was among the nations where the regulations allow individuals to make withdrawals from their retirement savings to cope with the COVID-19 pandemic. We analyze these quasi-natural experiments using the Autoregressive Distributed Lag Stationarity model and event study methodology spanning from March 2020 to April 2021. We find evidence that the first regulatory shock reduces the spread between the ten-year nominal sovereign bond yield and the annual interbank rate and amplify the impact of agent economic perceptions in the short term. These findings are useful for policymakers and investors regarding to adverse repercussions of this the policy on the economy going forward.

Keywords: Regulatory shocks; Pension funds; Bond spread rates; Emerging markets; COVID-19 (search for similar items in EconPapers)
JEL-codes: C32 G14 G18 G28 G51 K23 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:101:y:2025:i:c:s1059056025003181

DOI: 10.1016/j.iref.2025.104155

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