Role of Government Intervention during COVID-19: An Aggregate and Sectoral Analysis of Stock Returns in Pakistan
Abstract
This paper aims to examine the effects of COVID-19 on stock returns of stock returns of Pakistan at aggregate and sectoral level. Moreover, it attempts to examine the moderating role of government intervention on the effects of covid-19 on stock returns. Stock returns of seven major sectors of Pakistan stock exchange (PSX) were selected over the sample period from March 2020 – Jun 2021. The regression model is estimated using OLS estimators. The paper has contributed to literature by examining the impact of covid-19 while taking into account the moderating role of government intervention at sectoral and aggregate level. The finding of the study document that covid-19 had a statistically significant negative impact on stock returns at aggregate and sectoral level and government intervention had an important mitigating impact on stock returns of KSE.
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