The Impact Of Government Intervention Policies On The Vietnamese Stock Market During Covid-19 Pandemic

Abstract

As the coronavirus pandemic (Covid-19) spreads, several countries are preparing responses. With Covid-19 wreaking havoc on humanity, as shown by the number of people infected and killed by the virus, countries reacted by restricting economic activity and people's movement, enacting travel bans, and enacting stimulus packages to cushion the unprecedented downturn in economic activity and job losses. The most active financial indicator, namely the stock markets' response to the Covid-19 pandemic, is examined in this paper, with a focus on Vietnam's stock markets. We began by looking at the country's strategies for combating the pandemic, such as implementing policies and offering business support packages to compensate for the harm caused by the crisis. This paper uses time series data from VN-INDEX database including 352 observations during 4 September of 2019 to 22 January of 2021 to analyze the relationship between government policies to combat the Covid-19 pandemic and return of the VN-INDEX. The original statistical method, OLS Regression ARIMAX and fixed effects are employed to investigate the government policies, other variables and return of VN-INDEX. The results reveal that not all government policies have a significant relationship with return VN-INDEX during the pandemic crisis. Specifically, we find that only Border and entry control (P4) and Others (P7) and fixed effects have significant impact on the return VN-INDEX. Other moderators including Cases, Deaths, Special Cases and their influence on return VNINDEX are also discussed. In phases, government policies are more important to VNINDEX return during crisis than other variables. Finally, these influences are more noticeable in phase 2 and phase 4. The study contributes to the literature by providing directions for future research about the government policies, other variables and return of VN-INDEX under a longer crisis duration and helping investors and government to achieve better solutions to managing pandemic and planning against it.