The COVID-19 pandemic and the performance of the stock exchange market: Evidence from the Bahrain Stock Exchange indexes

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Abstract

Numerous studies confirmed that COVID-19 still has a negative impact on financial market performance worldwide, which inversely affected investors’ perceptions and decisions by creating uncertainty and a risky investment environment (Bagão, Dias, Heliodoro, & Alexandre, 2020). Therefore, the current study tries to assess the influence of the COVID-19 pandemic on Bahrain Stock Exchange indexes during the pandemic peak period in 2021. The effect of the COVID-19 pandemic on the Bahrain Stock Exchange is analysed using the autoregressive distributed lags (ARDL) approach. Daily observations from January 1, 2021, to September 30, 2021, in Bahrain, encompassing the pandemic peak period. COVID-19 pandemic used to represent independent variables by new daily cases (positive), death cases and recovered patient cases. Meanwhile, the study utilized the Bahrain Stock Exchange for the dependent variables, including both Bahrain all-share index (BASI) and the Bahrain Islamic index (BII). The findings showed a negative and negligible association between BASI, BII, and COVID-19. The study found that both indexes and daily retrieved cases exhibit a favorable correlation during the research period. Additionally, the analysis concluded that both indexes are roughly moving in the same way in reaction to the present epidemic.

Keywords: Financial Markets, Bahrain All-Share Index, Bahrain Islamic Index, COVID-19, Pandemic, ARDL

Authors’ individual contribution: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G1, G140, O15

Received: 09.11.2021
Accepted: 22.04.2022
Published online: 26.04.2022

How to cite this paper: Oudat, M. S. (2022). The COVID-19 pandemic and the performance of the stock exchange market: Evidence from the Bahrain Stock Exchange indexes. Corporate & Business Strategy Review, 3(1), 19–28. https://doi.org/10.22495/cbsrv3i1art2