Impact of the COVID-19 virus on MENA stock market

Sirine Ben yaala; Jamel Eddine Henchiri

doi:10.36923/economa.v27i1.238

Open Access Article Finance

Sirine Ben yaala ⁽¹⁾, Jamel Eddine Henchiri ⁽²⁾

(1) RED Laboratory, Higher Institute of Management, University of Gabes, Tunisia,

(2) RED Laboratory, Higher Institute of Management, University of Gabes, Tunisia

https://doi.org/10.36923/economa.v27i1.238

Issue
Vol. 27 No. 1 (2024)

Submitted
February 6, 2024

Published
April 4, 2024

Keywords:

COVID-19, Stock Market Reaction, MENA Region, Infectious Diseases and Finance, Market Efficiency, Economic Impact of Pandemics

Download PDF

Abstract

This study examines the influence of contagious infectious diseases, specifically COVID-19, on stock market behavior. With the global emergence of COVID-19, we have witnessed not only the health implications of a pandemic but also its profound social and economic repercussions, exacerbated by the implementation of lockdown measures. Utilizing panel data analysis, we assess the impact of disseminated information regarding the virus on the stock markets of the MENA region. Our findings reveal that the daily increases in both total confirmed cases and total deaths attributable to COVID-19 have a consistently significant and negative effect on stock returns across all observed markets. In conclusion, our analysis confirms that the spread of COVID-19 has had a detrimental impact on stock market returns in the MENA region. This underscores the vulnerability of financial markets to global health crises and highlights the necessity for market participants to consider health-related information as a significant factor in risk assessment and investment decision-making processes.

Full text article

Generated from XML file

References

Al-Awadhi, A. M., Al-Saifi, K., Al-Awadhi, A., & Alhamadi, S. (2020). Death and contagious infectious diseases: Impact of the COVID-19 virus on stock market returns. Journal of Behavioral and Experimental Finance, 100326. https://doi.org/10.1016/j.jbef.2020.100326 DOI: https://doi.org/10.1016/j.jbef.2020.100326

Anon. (n.d.). Coronavirus economics: Debt-laden countries at risk, as financial markets screech to a halt. UN News. Retrieved from [URL]

Anon. (n.d.). Coronavirus: le PIB mondial pourrait diminuer de 0,9% en 2020 à cause de la pandémie de Covid-19. ONU Info. Retrieved from [URL]

Baltagi, B. (2008). Econometric Analysis of Panel Data. John Wiley & Sons.

Barro, R. J., Ursúa, J. F., & Weng, J. (2020). The coronavirus and the great influenza pandemic: Lessons from the "Spanish flu" for the coronavirus's potential effects on mortality and economic activity. National Bureau of Economic Research. https://doi.org/10.3386/w26866 DOI: https://doi.org/10.3386/w26866

Binder, J. (1998). The event study methodology since 1969. Review of Quantitative Finance and Accounting, 11, 111-137. https://doi.org/10.1023/A:1008295500105 DOI: https://doi.org/10.1023/A:1008295500105

Chen, C.-D., Chen, C.-C., Tang, W.-W., & Huang, B.-Y. (2009). The positive and negative impacts of the SARS outbreak: A case of the Taiwan industries. The Journal of Developing Areas, 281-293. https://doi.org/10.1353/jda.0.0041 DOI: https://doi.org/10.1353/jda.0.0041

Chen, M.-H., Jang, S. S., & Kim, W. G. (2007). The impact of the SARS outbreak on Taiwanese hotel stock performance: An event-study approach. International Journal of Hospitality Management, 26, 200-212. https://doi.org/10.1016/j.ijhm.2005.11.004 DOI: https://doi.org/10.1016/j.ijhm.2005.11.004

Chinazzi, M., Davis, J. T., Ajelli, M., Gioannini, C., Litvinova, M., Merler, S., ... Sun, K. (2020). The effect of travel restrictions on the spread of the 2019 novel coronavirus (COVID-19) outbreak. Science, 368, 395-400. https://doi.org/10.1126/science.aba9757 DOI: https://doi.org/10.1126/science.aba9757

Dumitrescu, E.-I., & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels. Economic Modelling, 29, 1450-1460. https://doi.org/10.1016/j.econmod.2012.02.014 DOI: https://doi.org/10.1016/j.econmod.2012.02.014

Fama, E. F. (1965). The behavior of stock-market prices. The Journal of Business, 38, 34-105. https://doi.org/10.1086/294743 DOI: https://doi.org/10.1086/294743

Gormsen, N. J., & Koijen, R. S. J. (2020). Coronavirus: Impact on stock prices and growth expectations. University of Chicago, Becker Friedman Institute for Economics Working Paper. https://doi.org/10.3386/w27387 DOI: https://doi.org/10.3386/w27387

Gourio, F. (2012). Disaster risk and business cycles. American Economic Review, 102, 2734-66. https://doi.org/10.1257/aer.102.6.2734 DOI: https://doi.org/10.1257/aer.102.6.2734

Hausman, J. A. (1978). Specification tests in econometrics. Econometrica: Journal of the Econometric Society, 1251-1271. https://doi.org/10.2307/1913827 DOI: https://doi.org/10.2307/1913827

Hsiang, S., Allen, D., Annan-Phan, S., Bell, K., Bolliger, I., Chong, T., ... Krasovich, E. (2020). The effect of large-scale anti-contagion policies on the COVID-19 pandemic. Nature, 1-9. https://doi.org/10.1101/2020.03.22.20040642 DOI: https://doi.org/10.1101/2020.03.22.20040642

Jensen, M. C. (1978). Some anomalous evidence regarding market efficiency. Journal of Financial Economics, 6, 95-101. https://doi.org/10.1016/0304-405X(78)90025-9 DOI: https://doi.org/10.1016/0304-405X(78)90025-9

Kraemer, M. U. G., Yang, C.-H., Gutierrez, B., Wu, C.-H., Klein, B., Pigott, D. M., ... Hanage, W. P. (2020). The effect of human mobility and control measures on the COVID-19 epidemic in China. Science, 368, 493-497. https://doi.org/10.1126/science.abb4218 DOI: https://doi.org/10.1126/science.abb4218

Ramelli, S., & Wagner, A. F. (2020). Feverish stock price reactions to COVID-19. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3550274 DOI: https://doi.org/10.2139/ssrn.3550274

Tian, H., Liu, Y., Li, Y., Wu, C.-H., Chen, B., Kraemer, M. U. G., ... Yang, Q. (2020). An investigation of transmission control measures during the first 50 days of the COVID-19 epidemic in China. Science, 368, 638-642. https://doi.org/10.1126/science.abb6105 DOI: https://doi.org/10.1126/science.abb6105

Topcu, M., & Gulal, O. S. (2020). The impact of COVID-19 on emerging stock markets. Finance Research Letters. https://doi.org/10.1016/j.frl.2020.101691 DOI: https://doi.org/10.1016/j.frl.2020.101691

Zhang, D., Hu, M., & Ji, Q. (2020). Financial markets under the global pandemic of COVID-19. Finance Research Letters, 101528. https://doi.org/10.1016/j.frl.2020.101528 DOI: https://doi.org/10.1016/j.frl.2020.101528

Authors

Sirine Ben yaala

RED Laboratory, Higher Institute of Management, University of Gabes

https://orcid.org/0000-0002-3535-2669

sirine17@live.fr (Primary Contact)

Jamel Eddine Henchiri

RED Laboratory, Higher Institute of Management, University of Gabes

https://orcid.org/0000-0001-7675-056X

Author Biographies

Sirine Ben yaala, RED Laboratory, Higher Institute of Management, University of Gabes

Dr. Sirine Ben Yaala is currently an Assistant Professor at the Higher Institute of Management, University of Gabes, Tunisia. She received her Ph.D in Finance from the Faculty of Economics and Management at the University of Sfax, Tunisia. Prior to her doctoral studies, she earned a Research Master's degree in Finance and Insurance at the Higher Institute of Management of Gabes, Tunisia (ISGG). Dr. Ben Yaala began her university course by completing her Bachelor's degree in Finance at the Higher Institute of Management of Gabes, Tunisia (ISGG), where she was the first student awarded in both her Bachelor's and Master's promotions. As a member of the Research, Enterprise & Decisions (RED) Laboratory at ISGG, Dr. Ben Yaala is actively engaged in research focusing on financial market, risk and crisis management, behavioral finance, portfolio management, financial market regulation and crisis prediction.

Jamel Eddine Henchiri, RED Laboratory, Higher Institute of Management, University of Gabes

Professor Jamel Eddine Henchiri is currently a Professor at the Higher Institute of Management, University of Gabes, Tunisia. He is also the Director of the Research Laboratory “Research, Enterprise & Decisions” (RED) at the University of Gabes, a position he has held since its establishment in 2013. In addition, he has been the President of the scientific journal of Academic Finance (JoAF). Prof. Henchiri is renowned for his contributions to the field of finance and insurance. He is the founder and main organizer of the international conference CSIFA: International Scientific Conference on Finance and Insurance, which he has overseen since 2006. In addition to his academic and organizational roles, Prof. Henchiri has also served as the Director of the Higher Institute of Management, University of Gabes, Tunisia. He obtained his Ph.D. in Management Science from Rennes University in France (IGR-IAE de Rennes: Rennes, Bretagne, FR). Prof. Henchiri's skills and expertise include finance, banking and finance, financial management, portfolio management, corporate governance, risk management, portfolio theory, behavioral finance, financial market regulation, credit risk management, and portfolio selection.

Ben yaala, S., & Henchiri, J. E. (2024). Impact of the COVID-19 virus on MENA stock market. Innovation Economics Frontiers, 27(1), 17–26. https://doi.org/10.36923/economa.v27i1.238

Download Citation

This work is licensed under a Creative Commons Attribution 4.0 International License.

Copyright / Open Access Policy: This journal provides immediate free open access and is distributed under the terms and conditions of the Creative Commons Attribution License (CC BY). This is an open-access journal, which means readers can access it freely. Readers may read, download, copy, distribute, print, search, or link to the full texts of the articles for any lawful purpose without seeking prior permission from the publisher or author. This is consistent with the Budapest Open Access Initiative's (BOAI) definition of open access.