Economic policy uncertainty and investors' sentiment—an Indian perspective

Idnani, Sohil; Adil, Masudul Hasan; Mal, Hoshiar; Kolte, Ashutosh

doi:10.1108/ijoem-04-2021-0567

Cited by 10 publications

(2 citation statements)

References 46 publications

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“…Our findings indicate some policy implications for governments and market regulators, since economic policies have an explicit impact on capital market performance [52]. Financial investment can play a substantial role in the reinforcement of sustainable development efforts by maintaining profit goals alongside environmental and social considerations, meaning that ESG investment could be an active tool for allocating resources in line with sustainability strategies.…”

Section: Performance Of Market In Connection To Covid-19mentioning

confidence: 79%

Are ESG Shares a Safe Haven during COVID-19? Evidence from the Arab Region

2021

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The world experienced significant changes in its social and economic lives in 2020–21. Major stock markets experienced an immediate decline. This paper attempts to examine the impact of COVID-19 on stock market performance as well as to identify the differences between the responses of ESG stocks and normal stocks to pandemic conditions in the Arab region. Daily time series for three years between March 2019 and March 2021 were collected for the S&P Pan Arab Composite index and S&P/Hawkamah ESG Pan Arab Index. We used a generalized autoregressive conditional heteroscedasticity (GARCH) model to measure market shocks and a non-linear autoregressive distributed lagged (NARDL) regression model to display the relationship between COVID-19 measurements and the performance of stock indexes. The findings suggest that the volatilities of ESG portfolios and conventional ones were equally affected in the pre-COVID period. However, in the post-COVID period, the magnitude of volatility in the ESG stock index was significantly less compared to that of the conventional stock index. The results also revealed that in the ESG market, shock tended to remain for a shorter period. Furthermore, the ESG index was not affected by the number of confirmed cases and deaths. However, evidence of asymmetric long-run cointegration existed between the S&P index and number of cases and deaths. Increases in the numbers of cases and deaths caused a decline in market index, whereas the reverse trends were observed in the retreat of the pandemic.

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Section: Performance Of Market In Connection To Covid-19mentioning

confidence: 79%

Are ESG Shares a Safe Haven during COVID-19? Evidence from the Arab Region

2021

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“…This measure of EPU has been used in various studies to know its impact on macroeconomic fundamentals. For instance, the impact of EPU on investors' sentiments has been observed in the case of India (Idnani et al, 2021), the impact of economic, monetary and stock market uncertainty on money demand function is examined (Khan et al, 2021), and the impact of EPU on corporate investment is examined by Wang et al (2014). The impact of EPU on economic activity at the firm level is shown by Baker et al (2016).…”

Section: Introductionmentioning

confidence: 99%

On the effect of COVID-19 and policy uncertainty on the stock market: evidence from India

Adil,

Haider

2023

IJSE

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PurposeThe present study empirically examines the impact of coronavirus disease 2019 (COVID-19) and policy uncertainty on stock prices in India during the COVID-19 pandemic.Design/methodology/approachTo this end, the authors use the daily data by applying the autoregressive distributed lag (ARDL) model, which tests the short- and long-run relationship between stock price and its covariates.FindingsThe study finds that increased uncertainty has adverse short- and long-run effects on stock prices, while the vaccine index has favorable effects on stock market recovery.Practical implicationsFrom investors' perspectives, volatility in the Indian stock market has negative repercussions. Therefore, to protect investors' sentiments, policymakers should be concerned about the uncertainty induced by the COVID-19 pandemic and similar other uncertainty prevailing in the financial markets.Originality/valueThis study used the news-based COVID-19 index and vaccine index to measure recent pandemic-induced uncertainty. The result carries some policy implications for an emerging economy like India.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-03-2023-0244

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Heterogeneous effect of economic policy uncertainty and firm financial performance: Empirical evidence from India

Chakradhar,

Gupta

2024

Manage Decis Econ

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Globally, high levels of economic policy uncertainty (EPU) have revamped the debate about its impact on different economic parameters of firms. In this regard, the literature exhibits three gaps. First, the effect of EPU on firm financial performance in an emerging economy context. Second, whether the influence of EPU on firm performance is asymmetric? Lastly, the moderating role of leverage in the relationship between EPU and firm performance. This paper fills all three gaps using the real options theory and investment irreversibility theory for India's NIFTY 100 firms over the period 2010–2019. The study applies several panel data econometrics models suitable to obtain comprehensive and robust results. Specifically, findings from the two‐step system GMM confirm that EPU negatively influences financial performance, which is significant for both accounting (return on assets, return on equity, net profit margin) and market (Tobin's Q) based measures. Moreover, the results of panel quantile regression reveal considerable heterogeneity in the EPU‐financial performance relationship. Further, higher levels of EPU appear to have unfavorable effects on excessively indebted firms. Overall, the study recommends that governments need to be alerted to the fact that mitigating EPU is crucial for promoting sustainable firm financial performance.

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Economic policy uncertainty and investors' sentiment—an Indian perspective

Cited by 10 publications

References 46 publications

Are ESG Shares a Safe Haven during COVID-19? Evidence from the Arab Region

Are ESG Shares a Safe Haven during COVID-19? Evidence from the Arab Region

On the effect of COVID-19 and policy uncertainty on the stock market: evidence from India

Heterogeneous effect of economic policy uncertainty and firm financial performance: Empirical evidence from India

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