Abstract:

The purpose of this study is to investigate the response of the Turkish stock market to the novel coronavirus pandemic. To probe the issue, a dataset based on a total of 23 selected Borsa Istanbul (BIST) subindices of BIST Industrials, Services, and Financial indices for the period between 20 March, 2020 and 31 December, 2020 is utilized together with the growth in the weekly numbers of new COVID-19 cases and deaths both for Turkey and the world. A total of four models are run using panel data analysis on 943 index-date observations. The results of the One-way random effects models with time effects reveal that BIST indices react negatively to the growth in weekly COVID-19 new case and death numbers for both Turkey and the world. Further findings as to the control variables show that while Credit Default Swap (CDS) figures reduce selected stock index returns, Chicago Board Options Exchange Volatility Index figures known as Fear Index (VIX) are found to increase them during the observation period.

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