Spillover effects during the Covid-19 pandemic

The outbreak of Covid-19 has put the world through unprecedented difficult times. By the end of June 2020, it was estimated that over 10 million people worldwide had been infected with Covid-19 and nearly 500,000 people had died as a result of their infection to the virus.

Stock markets

Spillover effects during the Covid-19 pandemic

Project description

On the economic side, the massive disruptions in international trade and business mobility, as well as the lockdowns and social distancing rules that followed, led to simultaneous supply and demand shocks and made the impact of the pandemic devastating for the global economy. 

The financial crisis induced by the Covid-19 pandemic is very different to previous downturns like the Great Depression in the 1930s and the 2008-2009 financial crisis. Indeed, contrary to past crises, the Covid-19 related financial downturn started outside of the economy and the financial system, led to simultaneous supply and demand shocks within and across many regions, and hit hardest the largest economies. The outbreak of the Covid-19 pandemic has also led to widespread fears in the stock markets, which led to soaring levels of volatility and sent the global stock markets to crash.

The project aims to examine

  • The interconnectedness of the stock markets before and during the Covid-19 outbreak
  • The transmission of systemic risk from the financial system of stock markets to each individual stock market, and vice versa.

Key research outputs

  • Financial Risk Spillover Effects during the Covid-19 Pandemic (Working Paper)