Does Stock Market Respond to Disease Pandemic? A Case of COVID-19 in Nigeria

Terver Kumeka, Falayi Olabusuyi Rufus () and Adedokun Adeniyi Jimmy ()
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Falayi Olabusuyi Rufus: Department of Economics, Dominican University, Ibadan
Adedokun Adeniyi Jimmy: Department of Economics, Dominican University, Ibadan

Acta Universitatis Sapientiae, Economics and Business, 2021, vol. 9, issue 1, 86-101

Abstract: This paper investigates whether stock markets respond to disease pandemic referencing the case of COVID-19 in Nigeria. The paper employs three cointegrating regression models: Fully Modified Ordinary Least Squares, Dynamic Ordinary Least Squares, and Canonical Cointegrating Regression to analyse the effect of growth in total COVID-19 confirmed cases and related deaths in Nigeria and across the globe from 27 February 2020 to 4 September 2020 on the stock market performance. Key findings support the presence of long-run association between stock market returns and COVID-19 in Nigeria. The stock market is found to respond negatively to both domestic and global growths in total confirmed cases and deaths of COVID-19. Consequently, affected businesses in Nigeria should be assisted and bailed out by the government through practices such as tax filing, subsidies, targeted spending, and credit.

Keywords: COVID-19; pandemic; stock market returns; cointegrating regressions (search for similar items in EconPapers)
JEL-codes: G2 I1 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:auseab:v:9:y:2021:i:1:p:86-101:n:3

DOI: 10.2478/auseb-2021-0005

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