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Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets
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Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Financial Markets".

Deadline for manuscript submissions: closed (31 May 2022) | Viewed by 35891

Special Issue Editors

Dr. Cuong Nguyen

E-Mail Website
Guest Editor
Department of Financial and Business Systems, Lincoln University, 21 Ellesmere Junction Road, Lincoln, Christchurch 7674, New Zealand
Interests: financial econometrics; financial markets; financial technologies; sustainability
Special Issues, Collections and Topics in MDPI journals
Dr. Harvey Nguyen

E-Mail Website
Co-Guest Editor
School of Economics and Finance, Massey University, North Shore, Auckland 0745, New Zealand
Interests: corporate finance; behavioral finance; market microstructure; climate change and capital markets; insider transactions; credit risk; corporate governance; financial accounting

Special Issue Information

Dear Colleagues,

The coronavirus 2019 pandemic has had a devastating impact on the global economy, resulting in the collapse of financial markets, borders closing, and travel suspension across the world. It is thus indubitably the right time for us to review the effect of infectious disease outbreaks on our societies, markets, and firms. At the same time, it is critical to investigate the consequences of uncertainties created from the outbreaks and other sources in financial markets and firms. These will provide us with lessons to better prepare for potential risks in the future.

This Special Issue invites submissions related to the impact of all infectious disease outbreaks on financial markets and firms. It also calls for submissions related to the impact of different uncertainties on financial markets and firms. 

We invite submissions that relate to (but are not limited to) the following topics:

  • The impact on international financial markets;
  • The impact on bond markets, commodity markets, and currency markets;
  • The impact on emerging and frontier markets;
  • The behavior of trading firms, investors, and investment management;
  • The impact on firm policies (capital structure, dividend, risk management, cash holdings, etc.);
  • The impact of uncertainties coming from economic policies, Twitter, market volatility, etc.

Dr. Cuong Nguyen
Dr. Harvey Nguyen
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • Financial markets
  • Uncertainty
  • Infectious diseases
  • Pandemics
  • COVID-19
  • Stock markets
  • Lockdown
  • Economic shocks
  • Risk and uncertainty
  • Financial risk management
  • Policy responses to COVID-19
  • Recession
  • Fintech
  • Start-ups
  • SME
  • Corporate finance
  • Social changes
  • International trade
  • Sustainability
  • Banking
  • Tourism
  • Energy
  • Real estate markets
  • Investors

Published Papers (10 papers)

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Research

22 pages, 6403 KiB  
Article
The COVID-19 Housing Boom: Is a 2007–2009-Type Crisis on the Horizon?
by Diamando Afxentiou, Peter Harris and Paul Kutasovic
J. Risk Financial Manag. 2022, 15(8), 371; https://doi.org/10.3390/jrfm15080371 - 22 Aug 2022
Cited by 6 | Viewed by 3156
Abstract
While the current housing market remains relatively strong, with housing prices setting records, concerns are growing of a potential housing bubble similar to that of 2007–2009; this paper compares the current housing market environment with that of 2007–2009 and concludes that the many [...] Read more.
While the current housing market remains relatively strong, with housing prices setting records, concerns are growing of a potential housing bubble similar to that of 2007–2009; this paper compares the current housing market environment with that of 2007–2009 and concludes that the many of the factors that caused the 2007–2009 crisis do not exist today. Factors associated with subprime mortgages, poor and non-existent underwriting loan requirements, weak regulatory oversight, exaggerated credit ratings, under-capitalization in the banking sector and excessive speculative activity in the housing market have been addressed by regulation, which is aimed at preventing another financial crisis similar to 2007–2009. Equally important, major fundamental factors affecting real estate valuation are providing support for the housing market and housing prices; these factors are impacting both the demand and supply side of the housing market. The factors include the lack of inventories of homes available for sale, the underproduction of housing, decreased household mobility limiting supply and the increase in housing demand from millennials and institutional investors; these fundamental factors were not evident during the 2007–2009 period. Despite a number of indicators signaling a potential topping out and overvaluation of housing prices, the authors conclude that the fundamental factors will limit the extent that the housing market weakens over the next few years. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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29 pages, 1256 KiB  
Article
Market Quality and Short-Selling Ban during the COVID-19 Pandemic: A High-Frequency Data Approach
by Sandra Ferreruela and Daniel Martín
J. Risk Financial Manag. 2022, 15(7), 308; https://doi.org/10.3390/jrfm15070308 - 14 Jul 2022
Cited by 3 | Viewed by 2149
Abstract
The recent emergence of COVID-19 and the subsequent short-selling restriction (SSR) imposed on some equity markets provide us with a unique framework to analyze the effects of this kind of measure on market quality in the context of increasingly automated equity markets. We [...] Read more.
The recent emergence of COVID-19 and the subsequent short-selling restriction (SSR) imposed on some equity markets provide us with a unique framework to analyze the effects of this kind of measure on market quality in the context of increasingly automated equity markets. We contribute to the literature by analyzing the microstructure and quality parameters of the Spanish equity market during COVID-19 and SSR. We study four subperiods, namely pre-crisis, turmoil, SSR, and first de-escalation periods, by means of a tick-by-tick dataset and the complete limit order book (LOB). We observe the following impact of the SSR on the constituents of IBEX 35: (1) the SSR did comply partially with its aim at an intraday level regarding volatility, but liquidity was reduced; (2) liquidity deterioration affected more the sell than the buy side of the LOB; (3) high-frequency activity (HFT) diminished during SSR, reinforcing volatility; (4) negative effects on liquidity and HFT diminished and disappeared as the ban was lifted; (5) HFT unidirectionally Granger causes 1 min realized volatility while the natural logarithm of the slope of the LOB bidirectionally Granger causes 1 min realized volatility. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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10 pages, 542 KiB  
Article
Evidence of Abnormal Trading on COVID-19 Pfizer Vaccine Development Information
by Andrew N. Mason and Ahmed Elkassabgi
J. Risk Financial Manag. 2022, 15(7), 299; https://doi.org/10.3390/jrfm15070299 - 6 Jul 2022
Cited by 2 | Viewed by 2054
Abstract
The 2019 COVID-19 pandemic led to an economic slowdown worldwide and shook the investment world. Pharmaceutical investments were influenced by the anticipation of COVID-19 vaccine developments. Our study examines the real-time impact of public announcements concerning COVID-19 vaccine developments on stock returns and [...] Read more.
The 2019 COVID-19 pandemic led to an economic slowdown worldwide and shook the investment world. Pharmaceutical investments were influenced by the anticipation of COVID-19 vaccine developments. Our study examines the real-time impact of public announcements concerning COVID-19 vaccine developments on stock returns and volatilities for Pfizer, Moderna, and the S&P 500. Market Return and Information Event methodology were used to analyze stock activities immediately before important public COVID-19 vaccine development announcements related to Pfizer and Moderna vaccines. This methodology was employed for vaccine news announcements between 2 January 2020 and 4 March 2022. Stock returns and volatility were analyzed with time-series regression analysis. Findings demonstrated that increased trade volatilities occurred immediately prior to COVID-19 vaccine development news was made public. Specifically, Pfizer stock returns were significantly higher (above the mean) immediately before positive COVID-19 vaccine development information was made public. Also, increased volume volatility was observed for Pfizer, Moderna, and the S&P 500 index stocks immediately before positive vaccine development information concerning Pfizer and Moderna vaccines were made public. These findings suggest that the vaccine information may have been leaked before being made public. If so, the findings may indicate that investors were taking advantage of insider information while trying to mitigate the appearance that they engaged in insider trading. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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14 pages, 321 KiB  
Article
International Corporate Cash Holdings and Firm-Level Exposure to COVID-19: Do Cultural Dimensions Matter?
by Khanh Hoang, Cuong Nguyen, Dung Viet Tran and Anh Phan
J. Risk Financial Manag. 2022, 15(6), 262; https://doi.org/10.3390/jrfm15060262 - 9 Jun 2022
Cited by 2 | Viewed by 2517
Abstract
This study investigates the impact of COVID-19 exposure on corporate cash holdings using firm data across sixteen developing and developed economies. The results show that firms reserve more cash when their exposure to COVID-19 increases. We also find a cash burn effect during [...] Read more.
This study investigates the impact of COVID-19 exposure on corporate cash holdings using firm data across sixteen developing and developed economies. The results show that firms reserve more cash when their exposure to COVID-19 increases. We also find a cash burn effect during the COVID-19 pandemic, meaning that the cash holdings are drained when firm exposure to the pandemic exceeds a tipping point. The effect is more pronounced in larger firms and firms with less cash reserve. Further analyses reveal that the cash burn effect tends to be stronger in countries with a high level of individualism and weaker in countries with high levels of risk aversion, masculinity, and long-term orientation. The findings provide fresh insights into the connections among corporate cash holdings, national cultures, and firm-level exposure to COVID-19. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
18 pages, 1671 KiB  
Article
Linking Supply Chain Disruption Orientation to Supply Chain Resilience and Market Performance with the Stimulus–Organism–Response Model
by Aaron Rae Stephens, Minhyo Kang and Charles Arthur Robb
J. Risk Financial Manag. 2022, 15(5), 227; https://doi.org/10.3390/jrfm15050227 - 21 May 2022
Cited by 11 | Viewed by 3167
Abstract
Since 2020, supply chain disruptions have emerged as an ever-present challenge. This research provides a glimpse into the organizational structures that develop supply chain resilience and market performance amid continuous supply chain disruptions. Utilizing psychosomatic variables and empirical modeling, a model was constructed [...] Read more.
Since 2020, supply chain disruptions have emerged as an ever-present challenge. This research provides a glimpse into the organizational structures that develop supply chain resilience and market performance amid continuous supply chain disruptions. Utilizing psychosomatic variables and empirical modeling, a model was constructed through a review of extant literature and tested with PLS-SEM analysis. Uniquely, this research model is framed with the stimulus–organism–response model; thus, placing a firm within the context of a tumultuous environment where stimuli elicit responses from an organization that behaves as an organism. Results demonstrate that organizational culture plays a critical role in developing supply chain resilience amid supply chain dynamism. Market performance was also developed but only through supply chain resilience; supply chain disruption orientation alone did not improve market performance. Mediation effects highlight the importance of supply chain disruption orientation, a strategic orientation that cements an organization’s ability to develop supply chain resilience. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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19 pages, 787 KiB  
Article
COVID 19 and Bank Profitability in Low Income Countries: The Case of Uganda
by Lorna Katusiime
J. Risk Financial Manag. 2021, 14(12), 588; https://doi.org/10.3390/jrfm14120588 - 7 Dec 2021
Cited by 22 | Viewed by 6871
Abstract
This study investigates the impact of the COVID-19 pandemic on banking sector profitability in Uganda for the period spanning Q1 2000 to Q1 2021, using the autoregressive distributed lag (ARDL Bound) testing approach to co-integration while controlling for bank specific and macroeconomic determinants [...] Read more.
This study investigates the impact of the COVID-19 pandemic on banking sector profitability in Uganda for the period spanning Q1 2000 to Q1 2021, using the autoregressive distributed lag (ARDL Bound) testing approach to co-integration while controlling for bank specific and macroeconomic determinants of bank profitability. Bank profitability is proxied by return on assets (ROA), return on equity (ROE), and net interest margin (NIM). The study finds that the COVID 19 pandemic has a significant negative effect on bank profitability only in the long run. Generally, the explanatory variables used in the study have short run and long run effects on bank profitability, although the impact is not uniform across the different measures of bank profitability. In the short run, bank profitability is generally negatively and significantly affected by the non-performing loans ratio, liquidity ratio, and market sensitivity risk, while the Treasury Bill interest rate and lending rate have a significant positive effect on bank profitability. In addition, the study finds that bank profitability has a tendency to persist in the short run, although persistence is only moderate, suggesting that the Ugandan banking sector may not have large deviations from a perfectly competitive market structure. In the long run, bank profitability is broadly positively and significantly affected by the non-performing loan ratio;, real GDP, lending rate and Treasury Bill interest rate while market sensitivity risk and the exchange rate significantly and negatively affect bank profitability. Surprisingly, the study finds inflation does not significantly affect bank profitability over both the short- and long-term. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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13 pages, 1197 KiB  
Article
Expectations Concordance and Stock Market Volatility: Knightian Uncertainty in the Year of the Pandemic
by Roman Frydman and Nicholas Mangee
J. Risk Financial Manag. 2021, 14(11), 521; https://doi.org/10.3390/jrfm14110521 - 1 Nov 2021
Cited by 1 | Viewed by 1690
Abstract
This study introduces a novel index based on expectations concordance for explaining stock-price volatility when novel events that are each somewhat unique cause unforeseeable change and Knightian uncertainty in the process driving outcomes. Expectations concordance measures the degree to which KU events are [...] Read more.
This study introduces a novel index based on expectations concordance for explaining stock-price volatility when novel events that are each somewhat unique cause unforeseeable change and Knightian uncertainty in the process driving outcomes. Expectations concordance measures the degree to which KU events are associated with directionally similar expectations of future returns. Narrative analytics of daily news reports allow for the assessment of bullish versus bearish views in the stock market. Increases in expectations concordance across all KU events results in reinforcing effects and an increase in stock market volatility. Lower expectations concordance produces a stabilizing effect wherein the offsetting views reduce market volatility. The empirical findings hold for ex post and ex ante measures of volatility and for OLS and GARCH estimates. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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16 pages, 890 KiB  
Article
The Effect of Risk, R&D Intensity, Liquidity, and Inventory on Firm Performance during COVID-19: Evidence from US Manufacturing Industry
by Jack Clampit, Dinesh Hasija, Michael Dugan and John Gamble
J. Risk Financial Manag. 2021, 14(10), 499; https://doi.org/10.3390/jrfm14100499 - 18 Oct 2021
Cited by 14 | Viewed by 4542
Abstract
Because prior knowledge may not generalize to the COVID-19 setting, scholars are racing to test the efficacy of existing theoretical frameworks during COVID-19. Most business studies are conceptual or surveys of damage. The main purpose of the paper is to extend the forthcoming [...] Read more.
Because prior knowledge may not generalize to the COVID-19 setting, scholars are racing to test the efficacy of existing theoretical frameworks during COVID-19. Most business studies are conceptual or surveys of damage. The main purpose of the paper is to extend the forthcoming stream that tests firm performance by examining it during COVID-19. We examine the sales growth of 1298 US manufacturers during COVID-19 compared to their pre-COVID-19 baselines. Riskier firms with higher R&D intensities performed better during COVID-19, especially when cash-to-inventory levels were low. This study is among the first to empirically identify actionable predictors of firm performance during COVID-19 via a quantitative analysis of strategies and performance outcomes. Understanding what type of firms perform at higher levels during COVID-19 will help decision makers make more informed decisions moving forward. Employing ordinary least squares (OLS) regression to test our hypotheses, our findings suggest that R&D intensive firms should pivot tactically regarding current asset management, if needed, but not strategically, while prioritizing inventory versus cash retention. The positive effect of inventory versus cash extends theory by suggesting a new boundary condition related to pandemics that reverses the positive link between cash and performance found during crises with more conventional levels of turbulence. Our most important contribution, however, is practical, via the testing of predictors that can help firms during COVID-19. For example, we found that firms with higher levels of operating risk experienced 60 percent more sales growth than risk-averse firms. This knowledge that risk-taking predicted performance during COVID-19 (especially when coupled with a focus on R&D intensity and inventory level) may encourage those that can adopt less risk-averse strategies, while others focus on tactical adjustments or mitigative measures during COVID-19 and future black swan events. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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10 pages, 530 KiB  
Article
Changes in Consumption in the Early COVID-19 Era: Zip-Code Level Evidence from the U.S.
by Hakan Yilmazkuday
J. Risk Financial Manag. 2021, 14(10), 478; https://doi.org/10.3390/jrfm14100478 - 11 Oct 2021
Cited by 1 | Viewed by 3144
Abstract
Using monthly zip-code level data on credit card transactions covering 16 U.S. cities, this paper investigates changes in consumption at local commercial places during the early coronavirus disease 2019 (COVID-19) era. Since using aggregate-level data can suppress valuable information on consumption patterns coming [...] Read more.
Using monthly zip-code level data on credit card transactions covering 16 U.S. cities, this paper investigates changes in consumption at local commercial places during the early coronavirus disease 2019 (COVID-19) era. Since using aggregate-level data can suppress valuable information on consumption patterns coming from zip codes, the main contribution is achieved by estimating common factors across zip codes that are controlled for factors that are zip-code and time specific as well as those that are zip-code and sector specific. The estimation results based on common factors across zip codes show that relative consumption of products and services that can be consumed at home (e.g., grocery, pharmacy, home maintenance) has increased up to 56% amid COVID-19 compared to the previous year, whereas relative consumption of products and services that cannot be consumed at home (e.g., fuel, transportation, personal care services, restaurant) has decreased up to 51%. Similarly, after controlling for the corresponding factors, online shopping has increased up to 21%, while its expenditure share has increased by up to 16% compared to the pre-COVID-19 period. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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13 pages, 1214 KiB  
Article
Impacts of Infectious Disease Outbreaks on Firm Performance and Risk: The Forest Industries during the COVID-19 Pandemic
by Ståle Størdal, Gudbrand Lien and Erik Trømborg
J. Risk Financial Manag. 2021, 14(7), 318; https://doi.org/10.3390/jrfm14070318 - 12 Jul 2021
Cited by 10 | Viewed by 3766
Abstract
We examine the financial performance of the forest products industry in the initial phase of the COVID-19 pandemic, employing data for publicly trading companies in the industry globally. We first examine the market investor reaction to the declaration of a pandemic by the [...] Read more.
We examine the financial performance of the forest products industry in the initial phase of the COVID-19 pandemic, employing data for publicly trading companies in the industry globally. We first examine the market investor reaction to the declaration of a pandemic by the World Health Organization (WHO) in March 2020 by conducting an event-study analysis. Then, we analyze medium-term changes in stock returns and their systematic risk by an econometric estimation of the capital asset pricing model. Our event-study analysis of the forest products industry shows that the forestry subsector was impacted more than the paper subsector when the WHO declared the pandemic. The effect was most prominent in North America. We find that the systematic risk for the forestry subsector tended to increase during 2020, until October. Again, this effect was most clear in North America. Conversely, the impact on the paper subsector was more stable. Full article
(This article belongs to the Special Issue Infectious Disease Outbreaks, Uncertainties, Firms, and Financial Markets)
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