Analyzing the Impact of Government Interventions on Stock Market Volatility During the COVID-19 Pandemic

Abstract

This study investigates the relationship between government interventions aimed at curbing the spread of the novel coronavirus (COVID-19) and stock market volatility across 67 countries. Using panel regression analysis, we examine how various non-pharmaceutical interventions influence financial market uncertainty. Using panel regression analysis, we examine how various non-pharmaceutical interventions influence financial market uncertainty. Our findings reveal that stringent policy responses significantly increase stock market volatility, independent of the direct impact of the pandemic itself. Specifically, information campaigns and public event cancellations are identified as major contributors to this phenomenon. These results highlight the dual role of government actions: mitigating health risks while simultaneously amplifying financial instability.