DOES ELECTION IMPACT ON STOCK MARKET RETURNS IN BANGLADESH?

Keywords: Election, Event study, Stock returns, DSE, Bangladesh.

Abstract

This paper investigates the impact of parliamentary general election on the stock market returns by considering the previous fifteen days and the after fifteen days of each of six elections in Bangladesh held between 1991 and 2018. The study analyzed the election effect on stock returns through considering both abnormal returns by choosing 20 stocks as a proxy of portfolio motive of the investors and the broad index returns as a measurement of whole market scenario. The study employed descriptive statistics, t-tests, and F-tests to understand the impact of election by gauging the changes in return series. Descriptive statistics showed very high differences in means, standard deviations, and volatilities. Paired t-tests showed significant differences between the means and F-tests showed significant differences between the variances of the returns during before and after days of these elections. The results were the same for abnormal returns and broad index returns. The impacts of individual election on the returns were also found as the same in most cases. The study has found some very useful insights part of which can benefit the policymakers to reform the policies. The common investors and the financial market participants can also make better investment plan.

JEL Classification Codes: D72, G14, P48.

Author Biographies

Gourav Roy, University of Dhaka, Bangladesh

MBA Graduate

Department of Finance

University of Dhaka

Dhaka, Bangladesh

Md Atiqullah Khan, University of Dhaka, Bangladesh

MBA Graduate

Department of Finance

University of Dhaka

Dhaka, Bangladesh

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Published
2021-08-03
How to Cite
Roy, G., & Khan, M. A. (2021). DOES ELECTION IMPACT ON STOCK MARKET RETURNS IN BANGLADESH?. Asian Finance & Banking Review, 5(1), 1-18. https://doi.org/10.46281/asfbr.v5i1.1256
Section
Original Articles/Short Communications