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PurposeMarket volatility is subject to good or bad news and even responses to fake news and policy changes. In this piece of work, the authors consider the effects of the recent COVID-19 pandemic event on the global equity market, commodities and FX market, measured in terms of the investors' fear index.Design/methodology/approachIn this empirical work, the authors employ time series-based regression models followed by augmented dummy regressions and growth of the COVID-19.FindingsCOVID-19-induced investors' fear appears to be higher in the equity segment for the first time since the market crash of 1987 and the global financial crisis of 2008–2009. Furthermore, this disease outbreak shock has been more pronounced in terms of crude oil prices. Besides, a market participant in the commodity and FX market has paid a disproportionate premium to protect such pandemic development. Findings show that Options act as the best hedge against an uncertainty like COVID-19 and that option-based implied volatility is the best measure of investors' fear and market volatility.Practical implicationsThis study has practical implications for the financial markets, e.g. (1) Contagious disease outbreak news matters for the equity, commodity, and foreign exchange markets – empirical outcome validates the theory of market efficiency valid for the Options. (2) Option's implied volatility is the best indicator of investor fear measured for the unprecedented economic news. Further implication holds for the policymakers and society, e.g. (1) The unavailability of short-selling could be one plausible reason for increased uncertainty and volatility; hence, policymakers should look upon this issue at the exchange level. (2) Any market needs multiple lines of risk management, effective price discovery and attractive liquidity.Originality/valueThe study is novel in terms of presenting market behavior amid COVID-19 across global equity markets and commodities and FX markets.

AbstractCohn et al. (2019) designed the field experiment about the lost wallets across 40 countries to examine whether people attempt to contact the owners to return the 17,000 wallets. We discussed the design flaw in their experimental settings by reanalyzing the relationship between the rates of wallet return, in the Cohn et al. (2019)'s data, and the percentage of the Internet penetration (over population) as an upper bound of proportion email users. We found that countries with limited access to email have a lower rate of wallets' return after controlling other factors. Furthermore, we revisited the Abeler et al. (2019)'s aggregated data to study whether the dishonest behaviors in the laboratory could predict the actual honesty behavior or not. It turns out that what happens in the lab makes no sense to our reality. This comment contributes to the extant literature about an experimental designation for honesty studies.

Trade openness plays a critical role in the growth of China and its partners. Using a system generalized method of moments (system GMM) estimator and quantile regression, a new viewpoint is presented on trade openness in China for institutional and economic factors over 15 years with 192 economies. The empirical findings provide two contrasting views. Intriguingly, China is seeking to broaden this strategy to countries with less control over corruption and low political stability. By categorizing countries as advanced, emerging, and developing, the study provides the evidence that exchange rate volatility has a negative effect on trade openness, while investment, labor force, and broad money share a positive impact. This study suggests that Chinese policymakers should further boost financial reform to promote trade development. Other countries desirous of greater trade openness with China should have more efficient management of macroscopic economic factors. Finally, the study also examines the two main groups of international offshore financial center from econometric convergence test and club clustering for trade openness in China from the worldwide perspective.

AbstractWe consider the response of each of the 67 industries that trade between the United States and United Kingdom to the volatility of the real dollar–pound exchange rate. When we follow previous research and estimate a linear ARDL model for each industry, we find short‐run effects of volatility in 22 US exporting industries to the United Kingdom that last into the long run only in nine industries. As for the UK exports to the United States, we find short‐run effects in 18 industries that last into the long run in 15 industries. However, when we estimate a nonlinear model for each industry, we find short‐run effects of volatility on 41 US exporting industries and on 43 UK exporting industries, all in an asymmetric manner. Short‐run asymmetric effects lasted into long‐run asymmetric effects in 24 US exporting industries to the United Kingdom and in 33 UK exporting industries to the United States. While total trade shares of industries from the linear models were negligible, those of the industries from the nonlinear models were significant in size, in the tune of one‐third of the trade.