Natural Disaster Effects on Popular Sentiment toward Finance

Journal of Financial and Quantitative Analysis (JFQA), Volume 56 - Issue 7 - November 2021

35 Pages Posted: 4 May 2021 Last revised: 1 Dec 2021

See all articles by Manish Jha

Manish Jha

Georgia State University - Department of Finance

Hongyi Liu

Washington University in St. Louis - Department of Economics

Asaf Manela

Washington University in St. Louis - John M. Olin Business School

Date Written: April 23, 2021

Abstract

We use a text-based measure of popular sentiment toward finance to study how finance sentiment responds to rare historical disasters and to the ongoing COVID-19 pandemic. Finance sentiment declines after epidemics and earthquakes, but rises following severe droughts, floods, and landslides. These heterogeneous effects of natural disasters suggest finance sentiment responds differently to the realization of insured versus uninsured risks. Finance sentiment declines at the start of the COVID-19 pandemic, but largely recovers in countries that responded with large fiscal spending and government guarantees.

Keywords: sentiment, natural disasters, text analysis, word embedding, COVID-19

JEL Classification: C82, E44, G01, G28, G52, N40, Q54

Suggested Citation

Jha, Manish and Liu, Hongyi and Manela, Asaf, Natural Disaster Effects on Popular Sentiment toward Finance (April 23, 2021). Journal of Financial and Quantitative Analysis (JFQA), Volume 56 - Issue 7 - November 2021, Available at SSRN: https://ssrn.com/abstract=3833110 or http://dx.doi.org/10.2139/ssrn.3833110

Manish Jha

Georgia State University - Department of Finance ( email )

University Plaza
Atlanta, GA 30303-3083
United States
3142508129 (Phone)

HOME PAGE: http://mjha91.github.io

Hongyi Liu

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
Campus Box 1208
Saint Louis, MO MO 63130-4899
United States
314-250-7428 (Phone)

HOME PAGE: http://hongyiliu.wixsite.com/myhomepage

Asaf Manela (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States
314-935-9178 (Phone)

HOME PAGE: http://apps.olin.wustl.edu/faculty/manela

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