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Dynamic Interaction of COVID-19 Incidence and Stock Market Performance: Evidence from Nigeria

Author

Listed:
  • Lukman O. Oyelami

    (Nigerian Institute of Economic and Social Research and Economics Unit, Distance Learning Institute University of Lagos)

  • Matthew I. Ogbuagu

    (Federal University Oye-Ekiti)

  • Olufemi M. Saibu

    (University of Lagos)

Abstract

The incursion of COVID-19 into global space has constituted both public health emergency and economic crisis, thus there is need to investigate the transmission of inherent uncertainty associated with the pandemic on stock markets. Based on this, this study investigates the dynamic interaction of COVID-19 incidence and stock market performance in Nigeria. The study uses daily time series data between 2/4/2020 and 8/8/2020 of All Share Index (ASI), COVID-19 pandemic confirmed cases, Nigerian borrowing rate and exchange rate to conduct the analysis. Sequel to careful econometric investigation of data, vector autoregressive model was adopted for estimation due to the dynamic nature of the study. The estimation results show that the lagged value of COVID-19 infections exerts negative impact on ASI; specifically, a unit increase in COVID-19 infections causes ASI to fall by 0.066%. Similarly, the lagged value of ASI exerts negative impact on COVID-19 cases. Equally notable, a unit increase in ASI causes covid-19 cases to fall by 0.02% though it is not statistically significant. The study concludes that COVID-19 has a negative effect on Nigerian stock market performance; therefore, apart from small and medium enterprises government may need to extend stimulus package to public quoted firms as part of the efforts to bring the economy back on track.

Suggested Citation

  • Lukman O. Oyelami & Matthew I. Ogbuagu & Olufemi M. Saibu, 2022. "Dynamic Interaction of COVID-19 Incidence and Stock Market Performance: Evidence from Nigeria," Annals of Data Science, Springer, vol. 9(5), pages 1009-1023, October.
    • Handle: RePEc:spr:aodasc:v:9:y:2022:i:5:d:10.1007_s40745-022-00407-7
    DOI: 10.1007/s40745-022-00407-7
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    References listed on IDEAS

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