Version 1
: Received: 30 April 2024 / Approved: 1 May 2024 / Online: 1 May 2024 (09:00:54 CEST)
How to cite:
Al-Otaibi, M.; Nor, N. M.; Yusri, Y. Evaluating the Influence of Value-Added Tax Policy Changes on the Liquidity and Performance of Banking Sector Stocks: An Event Study Analysis. Preprints2024, 2024050071. https://doi.org/10.20944/preprints202405.0071.v1
Al-Otaibi, M.; Nor, N. M.; Yusri, Y. Evaluating the Influence of Value-Added Tax Policy Changes on the Liquidity and Performance of Banking Sector Stocks: An Event Study Analysis. Preprints 2024, 2024050071. https://doi.org/10.20944/preprints202405.0071.v1
Al-Otaibi, M.; Nor, N. M.; Yusri, Y. Evaluating the Influence of Value-Added Tax Policy Changes on the Liquidity and Performance of Banking Sector Stocks: An Event Study Analysis. Preprints2024, 2024050071. https://doi.org/10.20944/preprints202405.0071.v1
APA Style
Al-Otaibi, M., Nor, N. M., & Yusri, Y. (2024). Evaluating the Influence of Value-Added Tax Policy Changes on the Liquidity and Performance of Banking Sector Stocks: An Event Study Analysis. Preprints. https://doi.org/10.20944/preprints202405.0071.v1
Chicago/Turabian Style
Al-Otaibi, M., Normaziah Mohd Nor and Yusniati Yusri. 2024 "Evaluating the Influence of Value-Added Tax Policy Changes on the Liquidity and Performance of Banking Sector Stocks: An Event Study Analysis" Preprints. https://doi.org/10.20944/preprints202405.0071.v1
Abstract
This paper aims to provide an evaluation of how Value Added Tax (VAT) policy alterations influence market liquidity, trading volume, and stock performance. To fill the existing literature gap on the direct effect of (VAT) adjustments on stock market dynamic, particulate within the banking industry. The study employs an event study methodology to analyse the immediate and medium-term effects on bank stocks listed in markets subject to a (VAT) adjustments. The core of the study analysis is anchored around two pivotal events, the initial application of (VAT) on 1st January 2018, and the subsequent (VAT) increase to 15% on 1st July 2020 using MATLAB R2022b. The study analysis encompasses the period immediately before and after the introduction and subsequent increase (VAT) in kingdom Saudi Ariba (KSA) employing an eleven sample comprises the (KSA) largest banks with a ±7 days window period from the event. The analysis revels that the imposition of 5% (VAT) lead a substation downturn in trading volume and stock returns of 9.5%, and 39.5%, subsequently. While when the (VAT) was increased by 15% the market exhibited a mixed but ultimately positive response of 3.3% trading volumes increases and 128.7% average stock return recovery.
Business, Economics and Management, Accounting and Taxation
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
