Abstract
ABSTRACT This study empirically examines the impact of lockdown policies in European financial markets, encompassing the United Kingdom and France, on market quality. I employ fixed-effect regression models to assess the influence of lockdown policies, alongside a Difference-in-Difference (DiD) natural experiment, incorporating Sweden as a control group. My findings reveal negative effects of lockdown policies on market quality, particularly regarding information efficiency. Moreover, these effects show persistent strength among all lockdowns. I also find non-lockdown policies can help to avoid significant decreases on market quality from both aspects. This study contributes valuable insights for policymakers and regulators, offering pertinent reference points for crafting and implementing effective crisis management policies from financial markets during turbulent economic periods.
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