Financial Market Reactions to Pandemic Shocks in Nepal: A Study of Stock Market and Banking Investments

Abstract

The epidemic caused by COVID-19 has had a significant influence on financial markets all across the world, especially those in underdeveloped economies such as what Nepal is experiencing. The stock market and banking sector of Nepal are the subjects of this study, which investigates how they responded to the pandemic shocks. Particular attention is paid to the volatility, risk, and performance of these financial markets throughout the turmoil. The study combines descriptive and econometric analysis to evaluate the influence of the pandemic on stock returns, market volatility, and the performance of the banking sector. The data for the study comes from the Nepal Stock Exchange (NEPSE) as well as commercial banks. The findings indicate that there are considerable swings in stock values, a rise in market volatility, and disparities in the effects that are experienced by various industries. In addition, the study sheds light on the resilience of particular industries, such as banking and insurance, and offers insights that can be utilised by investors and regulators in the management of financial risks during times of catastrophe.