Pandemic Risk Management for Public Health Care Schemes

Zhengqiao Liu; Yang-Che Wu; Mei-Chih Wang; Yue Ding; Tien-Trung Nguyen

doi:10.3389/fpubh.2021.700021

Pandemic Risk Management for Public Health Care Schemes

Front Public Health. 2021 Jul 27:9:700021. doi: 10.3389/fpubh.2021.700021. eCollection 2021.

Authors

Zhengqiao Liu¹, Yang-Che Wu², Mei-Chih Wang³, Yue Ding⁴, Tien-Trung Nguyen⁵

Affiliations

¹ Business School of Yango University, Fuzhou, China.
² Department of Finance, College of Finance, Feng Chia University, Taichung, Taiwan.
³ Center for Chinese Social and Management Studies, Tunghai University, Taichung, Taiwan.
⁴ College of Finance and Statistics, Hunan University, Changsha, China.
⁵ Faculty of Finance and Accounting, Nguyen Tat Thanh University, Ho Chi Minh City, Vietnam.

Abstract

The coronavirus disease 2019 (COVID-19) caused by a novel coronavirus, severe acute respiratory syndrome coronavirus 2, has caused a large death, a range of serious health problems, and significant economic costs in many countries around the world. This study analyzes statistical characteristics of pandemic disasters using historical records since the Middle Ages. Compared to literature which studies the effect of the COVID- 19 pandemic on the financial market, this paper attempts to find two financial instruments in the financial market to hedge pandemic risks. Two instruments could be useful for public health care schemes to increase their assets or decrease their liabilities during the pandemic period, namely, assets in the form of a biotechnology investment portfolio and liabilities in the form of pandemic bonds. Empirical results show the feasibility of such instruments and the informational efficiency of the U.S. stock market.

Keywords: COVID-19; pandemic hedging; pandemic probability model; pandemic risk management; public health care scheme.

MeSH terms

COVID-19*
Humans
Middle Aged
Pandemics* / prevention & control
Public Health
Risk Management
SARS-CoV-2