Have Our First Responses for COVID-19 Eased Financial Markets? Case of the Philippines

The COVID-19 pandemic has adversely affected the financial markets of the world. In this paper, we zero in on the Philippine financial markets and determine whether the initial policy responses of the national government and the domestic bourse were able to quell the uncertainty and ease the financial markets. In evaluating the effect of these measures, we consider a simple generalized Chow’s test to determine if key policies and market events were able to significantly affect a slew financial market variables representing the FX market, the equities market, the bond market, and the cost of borrowing. The results suggest that the initial monetary and fiscal actions have been able to ease the financial markets as a modest rebound in the equities market, an appreciation of the Peso, and a lower cost of borrowing and lending have been observed for the period in review.