The COVID-19 crisis which started as a health crisis is now a combination of demand-side and supply-side shocks that risk of becoming a long-standing economic crisis. COVID-19 has generated significant instability and high volatility in global capital markets. Today, the full impact of this virus has not yet been assessed and it is expected that the adverse effects of COVID-19 are likely to continue. What areas of the overall banking and financial secor, including valuation and profitability, are likely to be impacted? All of the following must be reexamined: results from operatons; liquidity; capital resources; possibility of a global recession; workforce shrinking; reduction in productivity; decrease in consumer confidence leading to a reduction in consumption; supply chain disruptions; difficulties with funding; limited information to make good decisions; implications for taxes, trade, and immigration; cybersecurity risks; fraud risks; and privacy risks. Q.E.D.
Dear Ako Doffou ,
Did the pandemic lead to structural changes in the banking sector?
Direct consequences include: the impact of the lockdown on remote shopping and telework, lower cash usage and a further shift towards innovative payment methods, the downturn suffered by the economy and bank borrowers. Indirect consequences (partly reinforcing pre-existing trends) include: the further development of payment services provided by nonbank competitors, an acceleration in bank digitalisation, a rise in cyber-attacks, a drop in the value of real estate collateral.
Source: https://www.europarl.europa.eu/RegData/etudes/IDAN/2021/689460/IPOL_IDA(2021)689460_EN.pdf
Banking sector performance during the COVID-19 crisis
Liquidity support, borrower assistance programs and monetary easing moderated the adverse impact from the crisis, but their impact varied considerably across banks and countries. By contrast, countercyclical prudential measures led to negative abnormal returns in bank stocks, suggesting that markets price the downside risks associated with these policies.
Source: Article Banking sector performance during the COVID-19 crisis
The Chinese pandemic has produced a change in the dynamics of transactions. This supposes the accumulation of financial values that do not become monetary and at the same time economic.
It is necessary to limit the financial products in the market so that they become economic or monetary. That is, the regulation of the financial market is associated with the dynamics of transactions so that the application of economic theories produces effects. The accounting methodolty of Edgeworth's box is an alternative to explain this situation, and determine the measures that must be adopted for the benefit of those of us who participate in a common project.
Dear Mr. Doffou!
You raised a relevant topic to consider. The answer is case (country) - and context (regional agreements such as the ones in the EU) dependent one:
1) Nigmonov, A., Shams, S. COVID-19 pandemic risk and probability of loan default: evidence from marketplace lending market. Financ Innov 7, 83 (2021). https://doi.org/10.1186/s40854-021-00300-x Open access:
Article COVID-19 pandemic risk and probability of loan default: evid...
2) Mathieu Simoens, Rudi Vander Vennet 2022. Does diversification protect European banks’ market valuations in a pandemic?, Finance Research Letters, Volume 44, January 2022, Available at: https://www.sciencedirect.com/science/article/abs/pii/S1544612321001744
Yours sincerely, Bulcsu Szekely
Hi, you can consider the following studies in support of your research:
Article Sustainable banking regulations pre and during coronavirus o...
Article Examining the role of gender diversity on ownership structur...
Article Religion vs ethics: hedge and safe haven properties of Sukuk...
Further, kindly refer to this project:
https://www.researchgate.net/project/COVID-19-and-financial-markets
Dear Ako Doffou,
The impact of the SARS-CoV-2 (Covid-19) coronavirus pandemic on the banking and financial sectors was multifaceted and significant for the development of these sectors in the economy. First of all, there has been an increase in the scale of digitization and Internetisation of many aspects of economic processes. There has been an increase in e-commerce, an increase in the scale of payments made, online settlements. There has been an increase in the importance of internet marketing, the development of e-logistics, internet and mobile banking. On the other hand, as a result of the decline in economic activity in many sectors of the economy, the demand for external financing of investment projects and current economic activity has decreased. The level of economic loans taken out from commercial banks dropped. Despite the central banking lowering interest rates to a level close to zero, the interest in taking out investment loans did not increase. Especially companies and enterprises where due to the pandemic, imposed lockdowns, public financial aid offered to economic entities, they postponed the implementation of their investment projects for the future and resigned from taking out new investment loans. In addition, the reduction in interest rates resulted in a decrease in the interest margin, which is the basis for the profitability of commercial banks that generate income and profits mainly from lending activities. As a result, many commercial banks showed significantly lower profits for 2020 compared to the financial results in previous years. In addition, the SARS-CoV-2 (Covid-19) coronavirus pandemic has had many different kinds of effects on financial markets, including capital markets, and stock markets. During the first wave of the pandemic, these effects were greatest. At that time, there was a large increase in investment risk and a high level of uncertainty among investors operating on capital markets. There was a short-lived but deep stock market crash in the stock and commodity markets. Successive waves of the pandemic caused smaller and gradually diminishing specific effects on the financial markets. Since the onset of the SARS-CoV-2 (Covid-19) coronavirus pandemic, i.e. since March 2020, I have been conducting research on the impact of the pandemic on the financial markets, the banking sector and the entire economy. I also study the impact of the applied anti-pandemic security instruments, the improvement of pandemic risk management processes and the applied fiscal policy instruments, including financial and interventionist public aid offered to economic entities, on the development of the economic crisis and its limitation by the applied anti-crisis socio-economic policy instruments. The results of the research carried out on the impact of the pandemic on financial markets, the banking sector and the entire economy as well as the impact of the applied interventionist economic policy on the economy, including the generated increase in inflation, are described in the article (IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON FINANCIAL MARKETS AND THE ECONOMY) posted at the end of 2021 on my profile of this Research Gate portal. Here is a link to one of my recent publications, which I posted on the RG portal: https://www.researchgate.net/publication/357866553_IMPACT_OF_THE_CORONAVIRUS_PANDEMIC_COVID-19_ON_FINANCIAL_MARKETS_AND_THE_ECONOMY
I invite you to research cooperation in this area.
Best wishes,
Dariusz
Thank you all (Aung Ze Ya, Miguel Angel Perez Benedito, Bulcsu Szekely, Sitara Karim, and Dariusz Prokopowicz) for your valuable inputs.
Banks and the overall financial sector had non-performing loans and faced liquidity problems. Due to the fact that, disruption of normal business activities during the full lockdown has hindered some businesses from meeting their banking obligations. Overall, COVID-19 pandemic has adversely affected the global economy, social life and day-to-day activities of all populations. In this regard, the pandemic has led to global socioeconomic disruption which have resulted in; Workplace closures that have interrupted supply chains and lowered productivity, decline in the international trade i.e. exports and imports between nations. Furthermore, the majority of business started to pursue their activities online. Thus, some people have lost their jobs, while others have suffered from income decline due to lockdowns and lower productivity.
Source:
Article THE SOCIOECONOMIC IMPACTS AND IMPLICATIONS OF THE COVID-19 P...
It looks like your question has answered itself. Check your full question narration and those are the answers to your question.
Please refer following articles for more details.
Article Banking sector performance during the COVID-19 crisis
Chapter The Effect of COVID-19 on the Banking Sector
Article The Eurozone banking sector in the time of COVID-19: Measuri...
The COVID-19 crisis has revealed the fact that banks are not part of the problem that needs to change, but rather part of the solution. Banks have thus far proven resilient, often as a result of tighter capital and liquidity requirements imposed on them in the aftermath of the global financial crisis of 2007-2009. Today, many governments use banks to funnel money to families and businesses hit by the economic fallout from the pandemic.
Thank you all (Dina Ghandour, Benjamin Musumali, Hiranya Dissanayake, and Azhar Saadi Hatem) for your inputs.
I also hope that with the development of eBanking and the increase in the number of ATM, Banks will reduce the number of physical branches, cut costs and eliminate the ridiculous account maintenance fees. So, I go along with you Hermann Gruenwald. So far, no bank has reduced the number of its branches but Bank of America has announced an elimination of certain fees such as overdraft and a reduction in the account maintenance fees.