Premium
Impact of China–Pakistan Economic Corridor on Pakistan stock market and firm performance
Author(s) -
Noor Amna,
Fatima Kaneez,
Ali Hamza
Publication year - 2021
Publication title -
journal of public affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.221
H-Index - 20
eISSN - 1479-1854
pISSN - 1472-3891
DOI - 10.1002/pa.2542
Subject(s) - stock exchange , china , stock market , stock (firearms) , event study , business , economics , foreign direct investment , financial market , sample (material) , finance , monetary economics , macroeconomics , geography , context (archaeology) , chemistry , archaeology , chromatography
China–Pakistan Economic Corridor (CPEC) is game changer series of projects for Pakistan initiated by China under its main project of One Belt One Road (OBOR). It is the largest investment ever made in Pakistan by a single foreign country. This study contributes in literature by examining the impact of CPEC on stock returns using event study approach. Sample period under investigation is since 2013 (inception of CPEC) to 2019. To further analyze whether this effect differs across sectors, we estimate the cumulative abnormal returns over sectors. Moreover, this paper attempts to explore whether the impact of CPEC is penetrated even to firm level or not. For this purpose, the median equality test is used to examine the impact of CPEC on financial and operational performance of non‐ financial firms listed in Karachi Stock Exchange. It is found that the impact of CPEC on stock market is positive but insignificant which shows that exceptionally good performance of stock market may not be attributed to CPEC. The effect of CPEC is mixed at sectoral level too. Nevertheless, significant positive effect is observed at financial and operational performance of firms.