The COVID-19 Rages on: How did Nigerian Banks’ Stock React?

Abstract

This study was carried out to examine how stocks of Nigerian deposit money banks (DMBs) reacted to the covid-19 pandemic from two perspectives: prices and volume traded on the Nigerian Stock Exchange. The effect of the pandemic on DMBs stock prices and traded volume was examined from three methodical areas: general effect, predictive effect and response to the covid-19 shock. Panel data of stock prices, volume of stocks traded of all the 15 listed Nigerian DMBs and monthly covid-19 data from February, 2020 to August, 2021 were analyzed with panel least square (PLS)s, panel vector autoregressive (PVAR) and impulse response function (IRF). These analytical methods were used to examine how covid-19 statistics, namely, number of confirmed positive cases, number of deaths due to the pandemic and number of discharged covid-19 patients affected Nigerian DMB’s stock prices and volume of stocks traded for the period under study. Results of the PLS revealed that while covid-19 positively affected stock prices of the banks, it negatively affected the volume of their stocks that were traded on the Stock Exchange. The PVAR results revealed that none of the covid-19 statistics examined exert long run predictive effect on stock price of Nigerian DMBs during the period, but the number of discharged patients and significantly had predictive affect volume of stocks traded. Both stock prices and volume traded responded swiftly to the shock from number of covid-19 confirmed cases and mildly to the fatalities and number of discharged patients. We conclude that, overall, the covid-19 pandemic significantly affected Nigerian DMB’s stock prices and volume traded and recommend that both banks and the NSE develop pandemic management strategies and invest more on technology driven stock trading facilities that will reduce the conventional brick-and-mortar trading during lockdowns.