Stock market reactions to Covid-19 and ECB stimulus plans in Europe

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bachelor_Johtimo_Niilo_2021.pdf (1.03 MB)

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School of Business | Bachelor's thesis
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Date

2021

Department

Rahoituksen laitos

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Mcode

Degree programme

Rahoitus

Language

en

Pages

27

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Abstract

In this thesis, I study the stock market reactions, that three pieces of Covid-19 related bad news and, three positive announcements of European Central Bank (ECB) stimulus had on European markets. Using event study methodology, the findings of this study suggest, that the World Health Organisation’s classification of Covid-19 as a pandemic caused a severe shock to the stock market returns across market capitalizations and industries. In this event, small and medium-sized companies’ stocks suffered the most while large-cap enterprises' stock prices experienced positive cumulative abnormal returns. The ECB’s announcements of the Pandemic Emergency Purchase Programme (PEPP) seemed to have given the markets the needed relief. The first and third PEPP announcements appeared to be the most effective. Medium-, and especially small-sized companies’ stocks accumulated positive abnormal returns from the announcements while large companies’ stocks seemed to lack significant reactions.

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Thesis advisor

Joenväärä, Juha

Keywords

stock markets, Covid-19, abnormal returns, event study, Europe

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https://urn.fi/URN:NBN:fi:aalto-202109199252

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[kand] Kauppakorkeakoulu / BIZ (Open Access)