Impact of Non-Financial Factors on Stock Exchange Performance (An Empirical Analysis of KSE-100 Index)

Burhan Ali Shah, Ghulam Shabbir Khan Niazi & Waseem Akram


This study examined the impact of non-financial factors including terrorism, political instability & natural disasters on Karachi stock exchange-100 index performance. Terrorism was measured in terms of bombing, target killing & kid-napping while strikes & judiciary decisions were taken as political instability. Natural disasters were observed in forms of floods & earthquakes. Time series data on daily basis from KSE-100 index was gathered covering period from 2005 to 2014. OLS method was applied to investigate the impact of non-financial factors on stock exchange performance. It was observed that earthquakes and judiciary decisions had significant negative effect onKSE-100 index while floods, kidnapping and strikes had negative but insignificant effect on KSE-100 index. However KSE-100 index did not react to bombing or target killing at even 10 % level of significance but the stock market reaction was more significant to judiciary decisions as compare to other events.

Keywords: KSE-100 index, terrorism, political instability, natural disasters, multi-linear regression analysis.


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