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Impact of the COVID-19 pandemic on banking and financial sector stock returns

Author

Listed:
  • Mahnoor Hanif

  • Majdi Hassan

  • Basma Henchiri

  • Muhammad AlDaas

Abstract

Using the Indian banking and financial services stocks, this study set out to examine the impacts of the global pandemic and government measures on the stock returns around four pandemic-related events. This study employs the event study methodology with the market model estimation for a 210-day estimation window [-214,-5] and a 15-day event window [-4,+10]. The reaction was mild to the announcement of 'Health Emergency of Global Concern', but as soon as the coronavirus outbreak was declared a 'global pandemic', the market reacted significantly. Further, due to the expected economic stimulus, the Reserve Bank of India's financial measures resulted in a positive response from the market. The public and private sector banks are almost non-reactive to the first event. The findings deny that with the available prices, during an event, abnormal returns are impossible. The analysis results make it easier for them to formulate sustainable policies and constitute a high-yield moderate-risk portfolio during such emergencies.

Suggested Citation

  • Mahnoor Hanif & Majdi Hassan & Basma Henchiri & Muhammad AlDaas, 2022. "Impact of the COVID-19 pandemic on banking and financial sector stock returns," International Journal of Accounting, Business and Finance, Indian Accounting Association, Patna Branch, vol. 1(2), pages 19-35.
    • Handle: RePEc:dbs:ijabfi:v:1:y:2022:i:2:p:19-35:id:72
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    References listed on IDEAS

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    1. Mazur, Mieszko & Dang, Man & Vega, Miguel, 2021. "COVID-19 and the march 2020 stock market crash. Evidence from S&P1500," Finance Research Letters, Elsevier, vol. 38(C).
    2. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    3. Pandey, Dharen Kumar & Kumari, Vineeta, 2021. "Event study on the reaction of the developed and emerging stock markets to the 2019-nCoV outbreak," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 467-483.
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    Cited by:

    1. Dharen Kumar Pandey, 2022. "Exploring the Intersection of Industry, Policy, and Performance: Insights from the June 2022 Issue," International Journal of Accounting, Business and Finance, Indian Accounting Association, Patna Branch, vol. 1(2), pages 1-1.
    2. Pankaj Kumar Mahato, 2022. "An event study analysis of the impact of bonus share announcements on Nifty 100 and Nifty Midcap 100 companies," International Journal of Accounting, Business and Finance, Indian Accounting Association, Patna Branch, vol. 2(1), pages 14-30.

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