COVID-19 Times: Where Lies Financial Safety?

14 Pages Posted: 11 Oct 2020

See all articles by Nader Virk

Nader Virk

Swansea University School of Management; Hanken School of Economics - Department of Finance and Statistics; University of Plymouth; Hanken School of Economics

Dylan Coles


Dominik Hagemense


Date Written: July 5, 2020


This study examines the impact of multiple facets of the COVID-19 (C-19) pandemic on return variation and volatility of different financial securities. These facets include morbidity and mortality rates; market sentiment and policy interventions. Results suggest that the effects of the wide-ranging policy responses have positively affected returns; however, it bears no effect on the unrelenting volatility – almost across all assets. We report that our C-19 index, fear gauges and sentiment index are plausible and significant predictors for asset return and volatility changes in the pre-pandemic announcement (PA) sample. The variations in return and volatility in USD, gold and bond premia are affected by infection fundamental and sentiment related changes across periods. When it comes to equities only changes in EUROSTOXX’s return and volatility changes are significantly predicted by infection data and policy changes. For the US equities only economic policy intervention influences return and volatility shifts in the post PA period. We conclude that predictions for bond premia and USD changes by investors sentiment display investors’ flight to safety across samples. Overall, the global price recovery in several financial securities is hinging on policy intervention and is adding to the future uncertainty, potential bubble formation and testing the tightness of USD’s reserve currency status when global equities and gold prices are simultaneously picking up.

Keywords: COVID-19 pandemic, policy interventions, infection fundamentals, infection sentiments

JEL Classification: G10, G14, G15, G18, G40, H12

Suggested Citation

Virk, Nader and Coles, Dylan and Hagemense, Dominik, COVID-19 Times: Where Lies Financial Safety? (July 5, 2020). Available at SSRN: or

Nader Virk (Contact Author)

Swansea University School of Management ( email )

Haldane Building
Singleton Park
Swansea, SA2 8PP
United Kingdom

Hanken School of Economics - Department of Finance and Statistics ( email )

FI-00101 Helsinki

University of Plymouth ( email )

Drake Circus
Plymouth, Devon PL48AA
United Kingdom

Hanken School of Economics ( email )

P.O. Box 479
Helsinki, Helsinki 00101

Dylan Coles

Independent ( email )

Dominik Hagemense

Independent ( email )

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