Stock Market’s Reaction to Covid 19: Evidence from an Emerging Economy
Keywords:
COVID-19, Pandemic Disease, Event Study, Random Effect Model, G-4 CountriesAbstract
This study examines the impact of the COVID-19 outbreak on the stock markets of G-4 countries. We use an event study methodology to explain the causes of ARs. Our sample consists of indices in G-4 countries. We find statistically significant negative ARs. The findings of this study reveal that cumulative average abnormal return (CAAR) from day 0 to day 6 consequence of increased panic in the stock markets resulting from an increasedCOVID-19 positive cases in the G-4 countries. The results of time series analysis confirm the recovery of stock markets from the negative impact of COVID-19. This study's findings are limited by its reliance on a single emerging economy, which may not be representative of other emerging markets. Additionally, the study's sample period is limited to the initial outbreak of COVID-19, and future research should examine the pandemic's long-term effects. The study also focuses solely on stock market reactions, neglecting other financial markets and instruments. Furthermore, the research relies on publicly available data, which may be subject to biases and limitations. These limitations highlight the need for further research to corroborate and expand upon the study's findings.
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