Banking Sector Performance During the COVID-19 Crisis

This paper analyzes bank stock prices around the world to assess the impact of the COVID-19 pandemic on the banking sector. Using a global database of policy responses during the crisis, the paper also examines the role of financial sector policy a...

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Main Authors:	Demirguc-Kunt, Asli, Pedraza, Alvaro, Ruiz-Ortega, Claudia
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2020
Subjects:	BANK STOCK RETURNS GOVERNMENT ANNOUNCEMENT BANKING SECTOR LIQUIDITY PREMIUM CORONAVIRUS COVID-19 PANDEMIC IMPACT STATE-OWNED BANKS COUNTERCYCLICAL LENDING
Online Access:	http://documents.worldbank.org/curated/en/209481597431651590/Banking-Sector-Performance-During-the-COVID-19-Crisis http://hdl.handle.net/10986/34369

id	okr-10986-34369
recordtype	oai_dc
spelling	okr-10986-343692022-09-20T00:08:46Z Banking Sector Performance During the COVID-19 Crisis Demirguc-Kunt, Asli Pedraza, Alvaro Ruiz-Ortega, Claudia BANK STOCK RETURNS GOVERNMENT ANNOUNCEMENT BANKING SECTOR LIQUIDITY PREMIUM CORONAVIRUS COVID-19 PANDEMIC IMPACT STATE-OWNED BANKS COUNTERCYCLICAL LENDING This paper analyzes bank stock prices around the world to assess the impact of the COVID-19 pandemic on the banking sector. Using a global database of policy responses during the crisis, the paper also examines the role of financial sector policy announcements on the performance of bank stocks. Overall, the results suggest that the crisis and the countercyclical lending role that banks are expected to play have put banking systems under significant stress, with bank stocks underperforming their domestic markets and other non-bank financial firms. The effectiveness of policy interventions has been mixed. Measures of liquidity support, borrower assistance, and monetary easing moderated the adverse impact of the crisis, but this is not true for all banks or in all circumstances. For example, borrower assistance and prudential measures exacerbated the stress for banks that are already undercapitalized and/or operate in countries with little fiscal space. These vulnerabilities will need to be carefully monitored as the pandemic continues to take a toll on the world’s economies. 2020-08-20T14:12:16Z 2020-08-20T14:12:16Z 2020-08 Working Paper http://documents.worldbank.org/curated/en/209481597431651590/Banking-Sector-Performance-During-the-COVID-19-Crisis http://hdl.handle.net/10986/34369 English Policy Research Working Paper;No. 9363 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Central Asia Eastern Europe Europe and Central Asia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	BANK STOCK RETURNS GOVERNMENT ANNOUNCEMENT BANKING SECTOR LIQUIDITY PREMIUM CORONAVIRUS COVID-19 PANDEMIC IMPACT STATE-OWNED BANKS COUNTERCYCLICAL LENDING
spellingShingle	BANK STOCK RETURNS GOVERNMENT ANNOUNCEMENT BANKING SECTOR LIQUIDITY PREMIUM CORONAVIRUS COVID-19 PANDEMIC IMPACT STATE-OWNED BANKS COUNTERCYCLICAL LENDING Demirguc-Kunt, Asli Pedraza, Alvaro Ruiz-Ortega, Claudia Banking Sector Performance During the COVID-19 Crisis
geographic_facet	Europe and Central Asia Central Asia Eastern Europe Europe and Central Asia
relation	Policy Research Working Paper;No. 9363
description	This paper analyzes bank stock prices around the world to assess the impact of the COVID-19 pandemic on the banking sector. Using a global database of policy responses during the crisis, the paper also examines the role of financial sector policy announcements on the performance of bank stocks. Overall, the results suggest that the crisis and the countercyclical lending role that banks are expected to play have put banking systems under significant stress, with bank stocks underperforming their domestic markets and other non-bank financial firms. The effectiveness of policy interventions has been mixed. Measures of liquidity support, borrower assistance, and monetary easing moderated the adverse impact of the crisis, but this is not true for all banks or in all circumstances. For example, borrower assistance and prudential measures exacerbated the stress for banks that are already undercapitalized and/or operate in countries with little fiscal space. These vulnerabilities will need to be carefully monitored as the pandemic continues to take a toll on the world’s economies.
format	Working Paper
author	Demirguc-Kunt, Asli Pedraza, Alvaro Ruiz-Ortega, Claudia
author_facet	Demirguc-Kunt, Asli Pedraza, Alvaro Ruiz-Ortega, Claudia
author_sort	Demirguc-Kunt, Asli
title	Banking Sector Performance During the COVID-19 Crisis
title_short	Banking Sector Performance During the COVID-19 Crisis
title_full	Banking Sector Performance During the COVID-19 Crisis
title_fullStr	Banking Sector Performance During the COVID-19 Crisis
title_full_unstemmed	Banking Sector Performance During the COVID-19 Crisis
title_sort	banking sector performance during the covid-19 crisis
publisher	World Bank, Washington, DC
publishDate	2020
url	http://documents.worldbank.org/curated/en/209481597431651590/Banking-Sector-Performance-During-the-COVID-19-Crisis http://hdl.handle.net/10986/34369
_version_	1764480755885408256

Banking Sector Performance During the COVID-19 Crisis

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