Impact of the Severity of the COVID-19 Pandemic on the Interaction Between Foreign Trading and Stock Market Volatility

Zeynep Kantur () and Gülserim Özcan

Chapter 10 in Financial Transformations Beyond the COVID-19 Health Crisis, 2022, pp 287-308 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter investigates the impact of the severity of the COVID-19 pandemic on stock markets by focusing on the relationship between foreign trading and stock market volatility. We use a panel data set of a selection of countries from February 3, 2020, to April 30, 2020. We first document that foreign trading is positively related to the stock market volatility. Next, we show that, as the severity of the pandemics increases, the link between foreign trading and stock market volatility weakens. Moreover, we find that increased health- and economics-related safety measures strengthen the relation between foreign trading and stock market volatility. We believe that the results of the analysis are crucial for policymakers to maintain financial stability during uncertain times.

Keywords: COVID19; Pandemic; Pandemic Outbreak; Health Crisis; Economics; Macroeconomics; Finance; Sustainable Finance; Financial Crisis; Financial Integration; Economic Integration; Global Financial Crisis; Financial Institutions; Corporate Finance; Corporate Governance; Board of Directors; ESG; Corporate Social Responsibility; Sustainable Finance; Stock Markets; Financial Markets; Stock Market Behaviour; Firm Liquidity; Emerging Markets; China; Financial Institutions; Money; Banks; Banking System; Banking Sector; Business Groups; Resilience; Safe Heaven; Gold; Oil; Peer-to-Peer Lending Market; Foreign Trading; Stock Market Volatility; Extreme Events (search for similar items in EconPapers)
JEL-codes: F4 F62 G15 G17 G3 O16 (search for similar items in EconPapers)
Date: 2022
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