The Impact of Government Interventions during Covid-19 Pandemic on Financial Market: Evidence from the Middle Eastern Countries

This paper primarily examined the influence of government involvement on stock market returns during Covid-19 pandemic, and the effect of such involvement on stock market returns in the context of the countries in the Middle East. The research data has its basis on balanced panel data gathered from 9 Middle Eastern nations, including Saudi Arabia, the UAE, Bahrain, Egypt, Jordan, Oman and Qatar. More specifically, the sample comprised of 820 daily observations from April 1 to September 20, 2020 of the above nations. According to the obtained findings, the stock market returns of the Middle Eastern countries had a positive and significant response towards reduced Covid-19 confirmed cases, while the social isolation measures proclamations led to negative stock market returns. Additionally, the income support packages and containment along with public awareness programs proclamations had a positive relationship with the stock market returns. The study contributes by providing insights that have implications for investors and policymakers in how to manage the Covid-19 pandemic adverse effects on the performance of stock markets and on the social distancing measures design for the purpose of enhancing any and all future government response. This study is the first of its kind, to the best of the author?s knowledge, to examine the effect of government interventions on stock market returns during the Covid-19 pandemic in the context of the Middle Eastern countries.