The responses of stock indexes of COVID 19 : two big earthquakes in Turkey

Abstract

The purpose of this study is to analyze the short-run impact of a pandemic-related event on Borsa Istanbul BIST 100 Index and 8 selected sectoral indices and explore the differences among industry responses. Following the event study approach, 8 sectoral stock indices are taken and their responses to a specific event day are analysed. The event day is 11 March 2020 which is the date for WHO declaration of pandemic and when the first confirmed case in Turkey was declared. After completing the first event study in detail including our literature review on similar studies for the same event day of 11 March 2020, at the end we decided to extend the research with two more event days which are non pandemic to measure the reaction of stock market indices towards a pandemic event vs non pandemic events in order to analyze how strong was the stock market reaction towards COVID 19. Therefore, the second event dayis selected as 17 August 1999 which is the date of Marmara earthquake which was the biggest earthquake in Turkey. This event day is selected as a non pandemic event day vs COVID 19 and also to analyze potential preventive measures and their impacts to support the stock market after a natural disaster like the earthquake. The third event day is selected as 6 February 2023 which is date for Kahramanmaraş earthquake, the biggest earthquake in Turkey after 1999 Marmara earthquake. This event date is selected for the same purpose and also to compare the impact of the preventive measures taken to support the stock market at two different earthquakes to analyze whether there was any progress in the preventive action plan since 1999 earthquake.