The Tunisian stock market before invoking Article 80 of the Constitution: the (in)direct impact of government interventions during the sanitary crisis

Abstract

PurposeThe purpose of this study is to investigate the impact of government policies adopted by the Tunisian government to cope with the COVID-19 sanitary crisis on stock market return.Design/methodology/approachThe author uses daily data from March 2, 2020, to July 23, 2021.FindingsThe author finds that policies interventions have a negative impact on Tunisia's stock market, particularly stock market returns due to stringency, confinement and health measures. Also, Government announcements regarding economic has a negative impact on Tunisia's stock market but this impact is insignificant. By conducting an additional analysis, the author shows that the government interventions policies amplify the negative effect of COVID-19 on stock returns.Research limitations/implicationsThese results will be useful for policy authorities seeking to consider the advantages and drawbacks of government measures. Finally, a legislative proposal about the audit of public debt should be included in the Constitution to spur Tunisia's economic and social recovery.Originality/valueThis study contributes to the related literature in two ways: First, it is the first study to examine the impact of government actions on stock market performance. Second, it bridges a gap in the literature by investigating the case of Tunisia, because most studies focus on developed and emerging economies.