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Can Government Direct Bailout Intervention Relieve the Crisis Sentiment in the Context of the COVID-19 Pandemic

Can Government Direct Bailout Intervention Relieve the Crisis Sentiment in the Context of the COVID-19 Pandemic

Linlin Guo, De-Shui Ma
Copyright: © 2022 |Volume: 30 |Issue: 4 |Pages: 15
ISSN: 1062-7375|EISSN: 1533-7995|EISBN13: 9781799898238|DOI: 10.4018/JGIM.297907
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MLA

Guo, Linlin, and De-Shui Ma. "Can Government Direct Bailout Intervention Relieve the Crisis Sentiment in the Context of the COVID-19 Pandemic." JGIM vol.30, no.4 2022: pp.1-15. http://doi.org/10.4018/JGIM.297907

APA

Guo, L. & Ma, D. (2022). Can Government Direct Bailout Intervention Relieve the Crisis Sentiment in the Context of the COVID-19 Pandemic. Journal of Global Information Management (JGIM), 30(4), 1-15. http://doi.org/10.4018/JGIM.297907

Chicago

Guo, Linlin, and De-Shui Ma. "Can Government Direct Bailout Intervention Relieve the Crisis Sentiment in the Context of the COVID-19 Pandemic," Journal of Global Information Management (JGIM) 30, no.4: 1-15. http://doi.org/10.4018/JGIM.297907

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Abstract

It has been increasingly common for the government to adopt non-market approaches to manage or interfere with the market during a stock market crisis. Taking Chinese government’s bailout of the market during the COVID-19 epidemic as the research object, this paper examines the impact of Chinese government’s direct bailout intervention on investors’ crisis psychology. The findings are as follows: (1) The government “buy-in” bailout effectively smooths investors’ crisis sentiment; (2) There is a downside of the government “buy-in” bailout, which compromises the market pricing effect and aggravates the herding effect; (3) For stocks not bought by the government, the government’s “verbal” intervention can relieve investors’ crisis sentiment in the short term; (4) Stocks with different characteristics are affected by the government’s “verbal” intervention to different degrees, with financial stocks and problematic stocks more susceptible to it.