COVID-19 Pandemic and Stock Market Response: A Culture Effect
| Autor: | Nhut H. Nguyen, Ivan Indriawan, Adrian Fernandez-Perez, Aaron Gilbert |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
media_common.quotation_subject
Culture Monetary economics Abnormal return Full Length Article 0502 economics and business Global health Political corruption Openness to experience Stock (geology) media_common 040101 forestry Uncertainty avoidance Government 050208 finance 05 social sciences COVID-19 04 agricultural and veterinary sciences Democracy Disaster Volatility 0401 agriculture forestry and fisheries Stock market Business Finance Financial market participants |
| Zdroj: | Journal of Behavioral and Experimental Finance |
| ISSN: | 1556-5068 |
| Popis: | National culture has been shown to impact the way investors, firm managers, and markets in their entirety respond to different situations and events. The psychology literature, however, notes that in terms of crisis, old behaviors and norms can get replaced by new norms as groups adjust to the new situation. To date, no one has looked at the impact of culture on market responses to disasters. This paper is the first to address the effect of national culture on stock market responses to a global health disaster. We find larger declines and greater volatilities for stock markets in countries with higher uncertainty avoidance, lower individualism, and greater experience with disease-causing pathogens during the first three weeks after the confirmation of the first COVID-19 case within a country. Our results are robust after controlling for a number of variables, including investor fear, cumulative infected cases, the stringency of government response policies, the 2003 SARS experience, the level of democracy, political corruption, and trade openness. |
| Databáze: | OpenAIRE |
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