The Tunisian stock market before invoking Article 80 of the Constitution: the (in)direct impact of government interventions during the sanitary crisis

Abstract

Purpose – The purpose of this study is to investigate the impact of government policies adopted by the Tunisian government to cope with the COVID-19 sanitary crisis on stock market return. Design/methodology/approach – The author uses daily data from March 2, 2020, to July 23, 2021. Findings – The author finds that policies interventions have a negative impact on Tunisia's stock market, particularly stock market returns due to stringency, confinement and health measures. Also, Government announcements regarding economic has a negative impact on Tunisia's stock market but this impact is insignificant. By conducting an additional analysis, the author shows that the government interventions policies amplify the negative effect of COVID-19 on stock returns. Research limitations/implications – These results will be useful for policy authorities seeking to consider the advantages and drawbacks of government measures. Finally, a legislative proposal about the audit of public debt should be included in the Constitution to spur Tunisia's economic and social recovery. Originality/value – This study contributes to the related literature in two ways: First, it is the first study to examine the impact of government actions on stock market performance. Second, it bridges a gap in the literature by investigating the case of Tunisia, because most studies focus on developed and emerging economies.

Keywords

• COVID-19
• Government interventions
• Tunisian stock market