The Covid-19 is an unexpected event in the world history with substantial socio-economic impact on the global economy. The global financial market was also badly affected as reflected by the extreme volatility as well as weak performances in the stock markets all over the world. How do the Islamic stock markets in various parts of the world behave during the Covid-19 shock? The objective of this study is to identify the impact of the Covid-19 pandemic as declared by the World Health Organization on the Islamic stock markets. Using the threshold volatility and event study models, the study analyses the impact of the Covid-19 announcement on the Islamic stock indices in the Indian Stock Exchange (represented by the Bombay Stock Exchange - BSE Shariah Index) and Indonesian Stock Exchange (represented by the Jakarta Islamic Indices - JII). With the date of event identified as 11th March 2020, the event window consists of 60, 30, and 20 days. The results show that the BSE Shariah and JII have positive coefficients, with the BSE Shariah Index shows negative response to the announcement of Covid-19 as global pandemic. On the other hand, the JII reacted positively to the event. The study shows the reaction of a stock exchange is dependent on other economic factors unique to the country, resulting in the events impact of the Covid-19 to vary from one country to another.
India and Indonesia are among the world-largest democracies, having a strong international presence through involvement in various economic and intergovernmental organizations such as in the E7 countries and G20 countries groups. This study aims to identify the impact of macroeconomic variables on the Islamic stock markets of India and Indonesia. Two Islamic stock market indices are considered: the Indian Bombay Stock Exchange (BSE) Shariah Index and the Indonesian Jakarta Islamic Index (JII). At the same time, the macroeconomic variables are foreign direct investment (FDI), import, export, gross domestic product (GDP), broad money (M3), and exchange rate (ER). The study adopts panel regression analysis on yearly data covering the period from 2011 to 2020. The pooled OLS regression model, fixed effect regression model (FEM), and random effect regression model (REM) have been employed. With the REM model being suggested as the most suitable model through the Hausman test, the results suggest that FDI, export, GDP, and ER have shown positive and statistically significant influence on both the BSE Shariah and JII. It is also shown that the macroeconomic variables of India and Indonesia are heterogeneities in nature and having mean distribution effects. The study’s findings suggest that increasing the possibilities of bilateral trade and investment in the sectors such as health and pharmaceuticals, automotive components, information technology, agro products, and tourism between India and Indonesia will go a long way. It is expediting greater economic activities among these two countries.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.
hi@scite.ai
10624 S. Eastern Ave., Ste. A-614
Henderson, NV 89052, USA
Copyright © 2024 scite LLC. All rights reserved.
Made with 💙 for researchers
Part of the Research Solutions Family.