The asymmetric effect of COVID-19 outbreak, commodities prices and policy uncertainty on financial development in China: evidence from QARDL approach

Chun Jiang, Yadi Zhang, Ummara Razi and Hafiz Waqas Kamran

Economic Research-Ekonomska Istraživanja, 2022, vol. 35, issue 1, 2003-2022

Abstract: COVID-19 epidemic has brought uncertainty to each sector of the global economy, including the financial sector. The widely spread disease has a drastic effect, which massively created health and financial crisis and virtually pushed the economy to the brink of recession. The study focused on the financial development of China during the COVID-19 pandemic and analyzed the long-term and short-term impact of COVID-19, oil prices, gold prices, and global economic policy uncertainty on the financial development of the country. The QARDL model, Wald test, and Granger causality tests are employed to assess the daily data of variables from January 1, 2020, to March 15, 2021. The study's empirical results revealed that an increase in the number of COVID-19 registered patients has an unprecedented negative effect on financial development, whereas the oil prices co-moved with the financial performance. On the other hand, gold prices and global economic policy uncertainty are negatively correlated with financial development. This study offers various policy recommendations to help the investors, government, and decision-makers to make better decisions for the improvement of the financial development of China.

Date: 2022
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DOI: 10.1080/1331677X.2021.1930092

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