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The Impact of COVID-19 Pandemic on Global Stock Markets: An Event Study

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  • Ibrahim N. Khatatbeh
  • Mohammad Bani Hani
  • Mohammed N. Abu-Alfoul

Abstract

Purpose: This study aims to empirically examine the immediate reaction of affected countries' stock market indices to COVID-19. Approach/Methodology/Design: The study applies an event study methodology using daily data series of stock price indices. Findings: Evidence from eleven global stock market indices shows that the first confirmed COVID-19 case announcement has had a significant negative impact on the returns. Moreover, these effects were more substantial following the WHO announcement of COVID-19 as a global pandemic on March 11, 2020. Practical Implications: The rapidly developing outbreak of the COVID-19 pandemic has depressed the affected countries' economies and caused turmoil in global financial markets. The results presented in this paper shed some light on the potential economic and social cost of COVID-19 concerns policymakers and other stock market stakeholders. Originality/value: The results suggest that stock markets have captured investors' expectations over potential adverse economic consequences of COVID-19. Moreover, there is evidence for an underreaction to the pandemic's announcement, as shown by the delayed response of stock markets in terms of significant CARs. These findings leave a wish list of topics for future research.

Suggested Citation

  • Ibrahim N. Khatatbeh & Mohammad Bani Hani & Mohammed N. Abu-Alfoul, 2020. "The Impact of COVID-19 Pandemic on Global Stock Markets: An Event Study," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 505-514.
    • Handle: RePEc:ers:ijebaa:v:viii:y:2020:i:4:p:505-514
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    References listed on IDEAS

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    Cited by:

    1. Herjuna Qobush Izzahdi & Ani Wilujeng Suryani, 2023. "COVID-19 Vaccination, Government Strict Policy and Capital Market Volatility: Evidence from ASEAN Countries," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 117-135.
    2. Wang, Zhixuan & Dong, Yanli & Liu, Ailan, 2022. "How does China's stock market react to supply chain disruptions from COVID-19?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    3. Josua Sinaga & Ting Wu & Yu-wang Chen, 2022. "Impact of government interventions on the stock market during COVID-19: a case study in Indonesia," SN Business & Economics, Springer, vol. 2(9), pages 1-35, September.
    4. Joanna Duda & Anna Wolak-Tuzimek & Lukasz Wojtowicz, 2021. "Competition Instruments Applied by Large Enterprises during the Crisis Triggered by the COVID-19 Pandemic," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 139-151.
    5. Ibrahim N. Khatatbeh & Hashem Alshurafat & Mohannad Obeid Al Shbail & Fouad Jamaani, 2023. "Factors Affecting Employees Use and Acceptance of Remote Working During the COVID-19 Pandemic: Evidence From the Jordanian Insurance Sector," SAGE Open, , vol. 13(2), pages 21582440231, June.

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    More about this item

    Keywords

    COVID-19; stock markets; abnormal returns; event study.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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