The Exogenous Shock of COVID-19: An Evidence from Financial Sector of an Emerging Economy

Md. Enamul Hasan, Asma Ahmed, Rowshonara Akter Akhi


This paper analyses the effect of COVID-19 on the financial sector of Bangladesh. Particularly, it explores how this pandemic has affected this industry, considering firms’ past (pre-pandemic) financial characteristics. Employing the Generalised Estimation Equations (GEE) method with 1050 firm-year observations, which includes listed Banks, Financial Institutions, and Insurance companies’ data obtained from annual reports, datastream, and WHO, we found that firms with the larger size, more leverage, liquidity, and higher ROA is more resilient to stock return declines reacting to this pandemic. This study should be of interest to investors and regulators as it provides new evidence related to an industry’s pandemic and stock market response based on their prior financial characteristics. Besides, it will contribute to the extant literature of COVID-19 and the firm’s stock return from an emerging economy perspective.

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