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Coronavirus and Market Volatility

Asset Management Resources

Coronavirus is having a major impact on public health and the global financial markets. As we continue to gauge the long-term impact of the novel coronavirus, CFA Institute is working to provide resources and to support the development of policy measures that address the functioning of markets and the financial system. We are also providing research — including analysis on lessons learned from past financial crises — to help guide the investment management industry during this time of instability and uncertainty.

What the Coronavirus Means for Financial Markets and Economic Impact

Setting current market events surrounding the novel coronavirus crisis into a historical context can help investors and investment managers understand and better respond.  By examining market stability and systemic risk, modern monetary theory, and a close history of financial markets, we can help manage the effects of today's coronavirus crisis as it unfolds.

Market Stability, Asset Management Strategies, and Systemic Risk

The coronavirus crisis does not need to lead to an economic collapse. Addressing the crisis through both research and policy, CFA Institute offers insights and analysis to guide investors, investment managers, and world leaders supporting financial markets. 

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    Systemic Risk

    The CFA Institute-sponsored Systemic Risk Council has called on policymakers to cease banks' equity buybacks and dividends and to support smaller emerging-market and developing economies throughout the coronavirus crisis. Read more on the Systemic Risk Council's advice for central banks and governments in an open letter to G20 leaders.

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    Market Stability and Volatility

    This article in the Financial Analysts Journal explains the potentially destabilizing feedback loops that can occur when unwinding short volatility-contingent strategies, in response to central bank actions or macro events.

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    Exchange-Traded Funds (ETFs)

    Learn more about the impact of ETFs on the financial system and proposed regulatory actions to mitigate market stability risks with this research paper.

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    Risk Taking and Biology

    Risk taking has clear biological effects that impact decision making for investment managers and investors. In this Take 15 video, learn how mind and body are at work during unstable times, such as the current coronavirus crisis, to inform investment management approaches.

Modern Monetary Theory

Fiscal stimulus forms part of the crisis response economic packages unveiled by many countries in response to the economic effects of coronavirus. Modern monetary theory (MMT) challenges established economic theories and offers new ways of thinking about solutions to policy problems.

Effects of the 2008 Global Financial Crisis

As the coronavirus pandemic unfolds, many industry watchers are looking back to the 2008 global financial collapse for clues for navigating the current crisis. While the impetus for the current economic downturn — coronavirus — is novel in name and circumstances, the insights gained from the Global Financial Crisis set in context the resiliency of financial institutions going into the current crisis. These insights also point to the array of policy tools available to central banks and governments to manage the financial and economic impact of such crises.

Interested in lessons learned from Asia Pacific? View posts covering a variety of related topics on the Asia-Pacific Research Exchange

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