COVID-19 Attack on Stock Markets: Event Study and Panel Data Analysis of Organization of Islamic Countries (OIC)

Muhammad Kashif, Fatima Sultana, Muhammad Atif, Muhammad Aslam, Ammara Sarwar, Umar Farooq Awan and Muhammad Wasif Hanif

Journal of Economic Impact, 2023, vol. 5, issue 1, 50-63

Abstract: The outbreak of COVID-19 has hampered the economies in all over the world. Due to this pandemic, many economic activities worldwide continue to be slumps. Current study examines the effect of COVID-19 contagion epidemic on stock markets of 23 OIC economies. Event study approach is employed to quantity abnormal returns (ARs). Fixed effect and random effect models are employed for the cause of abnormal return. Sixty (0 to 59) days, including the event day, are observed in the event window at the release of news related to COVID-19 in media at the international level; each window contains ten days. Pre-event window includes 120 days afore from the event day. We examine the ARs significantly negative in 4 ensuing windows in 59 days. Negative AR is significant for developed as well as developing economies. Findings reveal that the cumulative ARs from day first to day 33 remain in the range of decimal -0.203 to single digit -9.09. Still, from day 34 to day 59, it remains in the range of double digit -10.150 to -19.727, which is the consequence of increased distress in the stock market caused it requires the serious attention of the states to control this pandemic. Further, panel data analysis suggests that more time is required to return to the normal situation of stock markets from the adverse effect of COVID-19. Current investigation is significant for decision bodies for example national banks, stock market officials and state agencies to boost confidence among investors because this pandemic hampered social-economic activities all over the world, including the OIC economies.

Keywords: OIC Economies; Event study; Pandemic diseases; COVID-19; Stringency index; Random effect model (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:adx:journl:v:5:y:2023:i:1:p:50-63

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