Do Earthquakes Affect Stock Market Index?
Abstract
While environmental challenges are being significantly linked with natural disaster such as the earthquake, other implications such as the financial market implication are being almost overlooked. The relationship between natural disasters and financial markets is an important situation for investors and markets. Hence the current study examines the shock impact of earthquake on the stock index of the Republic of Turkey over the period of 2000M2 to 2017M12. While the exchange rate and the global economic policy uncertainty (GEPU) were incorporated in the autoregressive distributed lag (ARDL) model, significant statistical inference that are relevant for policy suggestions were observed. The study found that there is a dynamic impact of earthquake and exchange rate on the Turkish index. Also, while the impact of earthquake is statistically not significant in the short-run, the long-run impact of earthquake, GEPU and exchange rate are all statistically significant and negative. Generally, the study posits a valuable policy direction to government and other related stakeholders.
Keywords
References
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