The effect of COVID19 on financial markets

Financial markets have been a critical medium for centuries to transfer and distribute the funds needed for the proper functioning of the economy. Well-functioning financial markets are a critical component of high economic growth, and badly performing financial markets are one of the reasons why many nations throughout the world stay impoverished. Financial market activities also have a direct impact on personal wealth, company and consumer behavior, and the economy's cyclical performance. Due to the extreme importance for the economy, it is essential that financial markets function properly, are stable, and that imbalances in them are not the reasons for major economic crises. A sudden threat to that market stability in the last year and a half is the coronavirus pandemic. Due to the uncertainty surrounding the development of coronavirus-related events, markets have become extremely volatile and uncertain. Stock and index prices began to fluctuate and some of them reached record lows. What was the real and long-term impact on the mechanisms of financial markets, the aim is to show in this paper. For this purpose, the concept of the market itself, risks and regulations will be explained at the beginning of the paper. In order to assess the impact of coronavirus on financial markets, the paper looked at movements in stock market indices, market capitalization, and business volume before and after the pandemic. It also elaborates in detail what measures and policies the central bank and government have used to combat the effects of the virus. The key conclusion of the paper is that the pandemic had a significantly smaller negative impact on the markets than anticipated, and the paper offers several reflections on why the outcome was much better