STUDY OF GOVERNMENT POLICY AND CULTURE DURING THE COVID-19 PANDEMIC ON MARKET RESPONSE
This study explores the market reaction during the pandemic and its impact on market returns related to government policies such as state lockdowns, stimulus policies, travel bans, and monetary policies as well as the national culture of countries infected with COVID-19. In this study, the methodology used a literature review approach to market response during the COVID-19 period. The results of this study indicate that the average abnormal returns at the market level reported from 25 countries only 11 countries on the day the stimulus package was implemented had a statistically significant negative effect on returns and only three countries had a statistically significant positive effect on returns. State lockouts have a negative effect on stock returns in only 10 countries out of 25 countries and only two country locks have a statistically significant positive effect on returns. Travel bans have a significant positive effect on returns in five countries and there are three countries statistically, where travel bans have a significant negative effect. There were changes in monetary policy in 13 countries on the day the first changes in cash exchange rates were announced. Market returns in three countries experienced increasing returns while only two countries experienced decreasing returns. Stock markets reacted more negatively to countries with low individualism and high uncertainty aversion up to three weeks after the first announcement of COVID-19 infections in those countries.
COVID-19, government policy, market returns, culture; JEL Codes: I18