Publication: Banking Sector Performance During the COVID-19 Crisis
Date
2020-08
ISSN
Published
2020-08
Author(s)
Abstract
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.
Link to Data Set
Citation
“Demirguc-Kunt, Asli; Pedraza, Alvaro; Ruiz-Ortega, Claudia. 2020. Banking Sector Performance During the COVID-19 Crisis. Policy Research Working Paper;No. 9363. © World Bank, Washington, DC. http://hdl.handle.net/10986/34369 License: CC BY 3.0 IGO.”
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