Impact of COVID-19 on banking and insurance

Globally, the COVID-19 has been hurting economies including financial sectors and foundations

all around possible estimations. For banks particularly, the pandemic produces complex crises,

by and large through extensions in default rates. This is inclined to be more horrendous in

evolving economies with substandard financial market structure. The banks were already facing

non-performing loans, now this situation may increase the number further. The banks will face

decline in recovery and will eventually come across liquidity pressures. Moreover, banks are

encountering a fall in risk-weighted asset values, capital adequacy ratios, and interest income at

the individual bank and sectorial levels. Hence, such decline in these will create a huge impact in

non-performing loans. Banks influence a decent scope of risk and the pandemic goes to expand

their intensity through liquidity crunch, credit squeeze, expansions in non-performing loans and

default rates, declining market loan returns, declining loan interests hurting the bank run (Stiller

and Zink 2020).Accordingly, banks are probably going to learn increments during various

dangers, similar to credit risk, liquidity risk, market risk, and rate of interest risk. This is

frequently prone to be more challenging in developing nations where banks serve numerous

people and firms with moderately less financial limit (Wilson 2020; Tyson 2020).

Impacts on popular support for social and economic globalization

Impact on Education: All the educational institutions were shut down to contain the spread of

COVID-19. This in turn had a significant change in the education system as the physical classes

were transformed into online classes, all kinds of exams were changed to assignments and group

works. . Nonetheless, this has prompted hamper the progress of students, including the ones who

had plans to go abroad for advanced education. Around 1.2 billion understudies were affected in

144 nations, including Bangladesh. Despite the fact that the clearest effect was on the learning
cycle and progress, understudies have likewise been influenced as far as psychological well-

being and social uneasiness (Uddin M. , 2020).

Impact on Income & Employment: Almost 95% of Bangladeshi families' pay has been

affected during the three months lockdown period as instructed to contain the spread of Covid-19

(Antara, 2020).Income of 78.3% of the day laborers has diminished (Antara, 2020). Among the

100.22 million individuals at high risk of financial and wellbeing weaknesses, 53.64 million are

incredibly poor (DW.COM, 2020). Bangladesh's destitution rate may twofold to 40.9%

compared to the situation before pandemic (DW.COM, 2020). Moreover, there have been job

cuts and many have shifted low paying jobs. People have also shifted to rural areas for survival

(Raihan, 2020).

Social Impact: The lockdown period had led to high symptoms and cases of depression,

suicides, anxiety, disrupting the mental health of people. Low income, food insecurity, health

fear, loss of loved ones and the unpredictability of the end, has led us to a place inner turmoil.

Healthcare workers such as doctors, nurses, ambulance staff, etc. are some of the major victims

who have undergone extreme levels of stress and depression, severe fatigue and being exposed to

infected patients, fearing for their

Impact on Agriculture: Everyday around 12 to 15 million liters of milk remain unsold across

the country, which caused Tk 570 million in daily losses to the marginal dairy farmers (Begum,

2020).Bangladesh's fares make up over 70% of the crabs in the Chinese market. China quit

bringing in crabs this year in an offer to stem the episode of another covid-19 (Khaled, 2020).
Impact of pandemic on financial markets.

There have been significant impacts in the Global Financial Market. Financial market in Europe

and Asia have plunged as UK's primary file, dropped very 10% on 12 March, 2020, in its most

noticeably terrible day since 1987. The stock trade in Japan plunged very 20% from its most

elevated situation in December 2019. The US stock exchange hit the breaker mechanism fourfold

in ten days since its inception in 1987. The breaker has only ever been triggered once, in 1997.

The Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange have been closed since

March 26 aligned with the government's general holiday aimed at stopping the widening

coronavirus pandemic. Bangladesh is the only country in the world where stock trading has

remained closed for more than 3 months and resumed its operations from May 31, 2020. The

total trading days in FY 2019-20 is 210 days seeing that the market remained closed for 66 days

due to the pandemic. In the pre-pandemic period, December 2019, DSE broad index (DSEX)

went down by 1012.32 points from 1st January’19 and which is the lowest in 42 months since

June’16 and later settled at 4452.90. Since the market crash in 2010-2011, 2019 was a complete

nightmare for the stock market as the blue-chip index DS30 hit almost a 7 year low in the last

month of this year.

Impact of COVID-19 on financing and costs of capital

Due to the current pandemic situation the individual personal financing has been impacted

significantly as individual savings have soared. Due to these uncertain changes the earnings went

down and the expenditures went up. Along with individual incomes it has also impacted the

SMEs, as many companies had get out of business as the expenses were more than the organic
business they had. Industries such as RMG, Air and Travel, tourism and real estate faced a huge

decline as people were staying home and also reserving their savings considering future

uncertainties. However, many new businesses boomed and bagged profits which include

companies who were providing goods related to COVID-19 treatments. E-commerce and digital

entertainment grew by almost double compared to the situation before pandemic.

The previous year in the capital business sectors has highlighted the developing speed of

progress. This recommends a short window of time to set up the organization for disturbance,

potentially requiring you to pick up the pace on any planned strategic transformation. As of the

difference between individual companies, it can be clearly noted that such crisis as pandemic

creates new rooms to change strategy immediately and win. The companies who lacks to react

and are not proactive eventually goes out of business.

References

ADB (2020a) Asian development outlook 2019: fostering growth and inclusion in Asian Cities.

Mandaluyong City: Asian Development Bank. https://doi.org/10.22617/FLS190445-3

Ali , S., and Nazrul S., 2020. Impact of Coronavirus on Livelihoods: Low- and Lower Middle

Income Population of Urban Dhaka, Light Castles, Available online:

https://www.lightcastlebd.com/insights/2020/04/30/ impact-of-coronavirus-on-

livelihoods-low-and-lower-middle-income-population-of-urban-dhaka (accessed on 30

April 2020)

Aljazeera. (2020, October). Thousands of Bangladeshi garment workers struggle amid job loss.

https://www.aljazeera.com/economy/2020/10/2/thousands-of-jobless-bangladesh-

garment-

Antara, N. F. (2020, September 29). Health. Retrieved from Dhaka Tribune:

https://www.dhakatribune.com/health/coronavirus/2020/06/20/covid-19-impacts-95-

households-income workers-fear-for-future

Banker, S. (2020, July 9). COVID-19’s Beneficial Effects On The Consumer Goods Supply

Chain. Forbes. https://www.forbes.com/sites/stevebanker/2020/07/09/covid-19s-

beneficial-effects-on-the-consumer-goods-supply-chain/?sh=6ca90b644d6e

Begum, M., Farid, M., Barua, S., & Alam. (2020). COVID-19 and Bangladesh: Socio-Economic

Analysis Towards the Future Correspondence. preprints.org.

Bodrud-Doza M, S. M. (2020). Psychosocial and Socio-Economic Crisis in Bangladesh Due to

COVID-19 Pandemic: A Perception-Based Assessment. Front. Public Health.

Choking global stock markets: The Coronavirus effect. (2020, March 10). The Daily Star.

Retrieved from https://www.thedailystar.net/coronavirus-deadly-

newthreat/news/choking-global-stock-markets-the-coronavirus-effect-1878520

Tribune Desk. (2020, June 6). BGMEA: No ‘announcement’ made on layoffs. Dhaka Tribune.

https://www.dhakatribune.com/business/2020/06/06/bgmea-no-announcement-made-on-

layoffs

Uddin, S., & Munni, M. (2020, August 22). Pandemic wreaks havoc on jobs, pay. The Financial

Express. https://thefinancialexpress.com.bd/economy/pandemic-wreaks-havoc-on-jobs-

pay-1598068924