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Does banning cryptocurrencies affect stock markets?

Author

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  • Ahmed W. Elroukh

Abstract

Purpose - This paper aims to investigate the impact of banning cryptocurrencies on stock markets. Design/methodology/approach - The paper uses an event study approach and data from stock market indices in nine countries that imposed a ban. It uses the constant mean model and the market model, with two different benchmarks for global returns, to analyze if any of the stock indices show abnormal returns on or around the announcement of a cryptocurrency ban. Findings - The analysis shows that banning cryptocurrencies did not affect the returns of stock markets in any of the countries studied, indicating that the cryptocurrency market and stock markets are decoupled from each other, or the ban was not effectively implemented. Originality/value - To the best of the author’s knowledge, this paper is the first to explore the potential spillover effect of a cryptocurrency ban on stock markets. It also bridges two strands of literature: the relationship between cryptocurrencies and traditional assets, and the impact of cryptocurrency regulation on their returns.

Suggested Citation

  • Ahmed W. Elroukh, 2023. "Does banning cryptocurrencies affect stock markets?," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 41(5), pages 998-1011, November.
    • Handle: RePEc:eme:sefpps:sef-08-2023-0506
    DOI: 10.1108/SEF-08-2023-0506
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    More about this item

    Keywords

    Cryptocurrencies ban; Abnormal returns; Stock markets; Event study; G12; G14; G15; G28;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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