COVID-19, Government Initiatives, and Stock Market Liquidity in Pakistan

Aamir Azeem, Muhammad Asghar, Dr. Naveed ul Hassan, Dr. Ijaz Butt

Abstract

This study focuses on two proxies of COVID-19 and its impact on Pakistan and government initiatives' stock market liquidity and the human cost by exploring the rate of spread of COVID-19 infections. Using time-series data of the Pakistan Stock Exchange from January 2, 2020 to November 30, 2020, our finding suggests that a decreasing (increasing) trend in the confirmed COVID-19 cases is associated with improving (deteriorating) liquidity of Pakistan's stock market. This study concludes that policy interventions are related to stock market liquidity. Results reveal that government initiatives' control over COVID-19 cases reduces the uncertainty among the market and investors.
Keywords: COVID-19, Stock Market liquidity, Stringency Index, Confirmed Cases, Death Cases.