COVID-19: Stock Market Reactions to the Shock and the Stimulus
14 Pages Posted: 9 Jun 2020
Date Written: May 31, 2020
Using the WHO announcement on March 11, 2020 and the Federal Reserve Bank announcement on April 9, 2020 as two events that represent the shock and the stimulus, this study finds that COVID-19 caused a negative shock to the global stock markets, especially in emerging markets and for small firms. We find that the US stock market experienced positive abnormal returns from the Fed stimulus compared to other developed countries and emerging markets. We find that the positive abnormal returns from the stimulus were garnered by the US large firms instead of the small firms.
Keywords: COVID-19, Event Study, Stimulus, Emerging Markets, Small Firms
JEL Classification: G14, G15, G18
Suggested Citation: Suggested Citation