Bank Stock Return Reactions to the COVID-19 Pandemic: The Role of Investor Sentiment in MENA Countries

Albaity, Mohamed; Mallek, Ray Saadaoui; Mustafa, Hasan

doi:10.3390/risks10020043

Cited by 19 publications

(12 citation statements)

References 83 publications

(103 reference statements)

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“…Investor sentiment was used as an independent variable, and the data came from Google Trends (GT) every week and from a year-over-year calculation. Albaity et al. (2022) also developed a GT index using a similar method to that described here.…”

Section: Sampling Methodology and Variablesmentioning

confidence: 99%

“…Investor sentiment was used as an independent variable, and the data came from Google Trends (GT) every week and from a year-over-year calculation. Albaity et al (2022) also developed a GT index using a similar method to that described here. Google Trends (GT) is a tool that provides a normalised count of how many times a certain phrase or term was searched for on Google over a given period (Huang et al, 2020).…”

Section: Investor Sentiment (Ins)mentioning

confidence: 99%

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Has the heterogeneity of culture, investor sentiment and uncertainty altered bank stock returns in the MENA region?

Shah

2023

JES

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PurposeThis paper has analysed the impact of cultural dimensions, investor sentiment and uncertainty on bank stock returns. Also, the study examined the influences of the interaction between cultural dimensions and individual (private) sentiment (investor sentiment).Design/methodology/approachTo meet the study's objectives, a two-step generalised method of moments estimator was applied to the study sample, which included 105 banks in the nine Middle East and North African region countries between 2010 and 2020.FindingsThe cultural dimensions of individualism and masculinity were found to have a positive and significant effect on banks' buy and hold stock return (BUH). At the same time, power distance and uncertainty avoidance were discovered to have negative effects. Besides, the findings revealed that the interactions of power distance, individual sentiment and uncertainty avoidance had positive and significant relationships with banks' BUH. However, individualism, individual sentiment and masculinity had inverse relationships with banks' BUH. Furthermore, the findings revealed that investor sentiment positively influenced banks' BUH. Finally, uncertainty influenced banks' BUH stock returns positively.Research limitations/implicationsImportant implications for participants in the financial sector and governments may be learnt from this study's conclusions. Due to cultural biases, this study's findings suggested that investors overreact in the stock market.Originality/valueAdditionally, this research comprises one of the few studies that have overviewed the link between classical and behavioural finance in MENA countries with distinctive cultural characteristics.

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Section: Sampling Methodology and Variablesmentioning

confidence: 99%

Section: Investor Sentiment (Ins)mentioning

confidence: 99%

Has the heterogeneity of culture, investor sentiment and uncertainty altered bank stock returns in the MENA region?

Shah

2023

JES

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“…The study found evidence of positive abnormal return during the lockdown period, confirming that the lockout has a favourable impact on stock market performance. Albaity et al (2022) found the impact of COVID-19-related cases, deaths and COVID sentiment on the stock return of the banking sector of 16 Middle Eastern and North African countries. The study found a negative impact of COVID cases and deaths, while pandemic sentiment did not have an effect.…”

Section: Related Literature and Hypothesis Developmentmentioning

confidence: 97%

The COVID-19 Pandemic and Overconfidence Bias: The Case of Cyclical and Defensive Sectors

Azam

Hashmi

Hawaldar

et al. 2022

Risks

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This research paper analyses the impact of COVID-19 to investigate the overconfidence bias in 12 cyclical and defensive sectors in pre- and during COVID-19 periods using daily data from 1 January 2015 to 31 December 2020. The results of VAR show that in the pre COVID-19 phase overconfidence bias is more prevalent in all the cyclical sectors; in particular, MEDIA, METAL and REALTY have highly significant coefficients . In the defensive sectors, the VAR outcomes are not as strong as we expected, except for SERVICES. During the COVID-19 period, the investor shifted their focus to COVID-19-related opportunities, leading to a surge in the IT and PHARMA sectors. In both phases, METAL, MEDIA and REALTY exhibit overconfidence-driven stock trading behaviour. ENERGY is the only sector in both the phases that does not witness overconfidence bias.

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“…Finding about the relationship between market sentiment and stock returns are mixed. [20] documented that investor sentiment does not influence stock returns. In the other side, [4] and [26] noted that during the pandemic, investor sentiment negatively affected stock returns since investors retracted their stock to avoid greater losses.…”

Section: Previous Researchmentioning

confidence: 99%

“…Numerous studies on the impact of investor attitude on stock returns have been conducted in various countries, including Indonesia ( [4,11,[20][21][22][23]). However, research that discusses the relationship of causality between the two variables is rarely carried out [24].…”

Section: Introductionmentioning

confidence: 99%

Indonesian Covid-19 Pandemic Trends: Sentiment Analysis and Stock Return Connectedness

Tojibussabirin¹,

Kurniawati²

2023

Advances in Social Science, Education and Humanities Research

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The study aims to analyze the causality relationship of investor sentiment and stock returns during a pandemic. This research is important because the massive impact of the pandemic in various sectors has caused changes in investors' financial behavior, including an increase in covid 19 keyword searches and vaccines on google trends. The word vaccine was categorized as positive sentiment whereas the word covid 19 pandemic as negative sentiment. All data were obtained from google trend from January 2020 to December 2021. The stock return data from January 2020 to December 2021 were obtained from yahoo finance. This study used vector autoregressive to test the causality relationship of the two variables. There is a causality relationship between investor sentiment and stock returns because most investors are noise traders. Hence, their investment is categorized as a herding behavior where one investor prefers to follow the decisions made by other investors.

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Bank Stock Return Reactions to the COVID-19 Pandemic: The Role of Investor Sentiment in MENA Countries

Cited by 19 publications

References 83 publications

Has the heterogeneity of culture, investor sentiment and uncertainty altered bank stock returns in the MENA region?

Has the heterogeneity of culture, investor sentiment and uncertainty altered bank stock returns in the MENA region?

The COVID-19 Pandemic and Overconfidence Bias: The Case of Cyclical and Defensive Sectors

Indonesian Covid-19 Pandemic Trends: Sentiment Analysis and Stock Return Connectedness

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