This study attempt to know the existence of weak form efficiency in the Iraq stock exchange by using daily closing prices for the period (4/4/2022 - 4/4/2023) with total observation (243), the normality hypothesis tested using the (Kolmogorov-Smirnov test and Shapiro-Wilk test), both tests’ results showed that the Iraq stock exchange is non-efficient at the weak form, meaning that the market gives the chance to get unusual returns depending on the historical prices to forecast prices in the future.
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Stock Market Efficiency in Iraq.pdf
1. I
Kurdistan Region Government – KRG
Council of Ministries
Ministry of Higher Education and Scientific Research
Cihan University – Duhok
Department of Banking & Finance
Stock Market Efficiency in Iraq
A graduation projects Submitted to the Scientific Committee in
Department of Finance and Banking as Partial Requirements for
Bachelors of Science in Finance and Banking
By
Reber Hussein Shamsadin
2023 A.D. 2635 K. 1444 A.
2. II
DEDICATION
We would like to dedicate this modest work to my parents for their love, patience,
encouragement, and support This work is also dedicated to my brothers and sisters, and
to all my lovely friends.
3. III
ACKNOWLEDGEMENT
We would like to give praise and thanks to the Almighty God for his guidance and
protection throughout our lives and also seeing us through our studies. This research
project would not have been possible without the support of many people. We would
like to express our deepest gratitude to our supervisor Dr. Zeravan A. Asaad, for his
invaluable assistance, meticulous attention to detail, patience, and providing us with an
excellent atmosphere for doing this research. Deepest gratitude is also due to members
of the department of Banking and Financial Sciences committee. Special thanks to the
staff of the library for providing all the necessary facilities for completing this research.
We would also like to thank our friends for their continuous support and their
encouragement. We would never have been able to finish this work without the support
from our families.
4. IV
ABSTRACT
This study attempt to know the existence of weak form efficiency in the Iraq stock
exchange by using daily closing prices for the period (4/4/2022 - 4/4/2023) with total
observation (243), the normality hypothesis tested using the (Kolmogorov-Smirnov test
and Shapiro-Wilk test), both tests’ results showed that the Iraq stock exchange is non-
efficient at the weak form, meaning that the market gives the chance to get unusual
returns depending on the historical prices to forecast prices in the future.
5. V
Content page
DEDICATION I
ACKNOWLEDGMENT II
ABSTRACT III
LIST OF TABLES V
LIST OF FIGURS V
CHAPTER ONE: BACK GROUND OF THE STUDY VI
1.1 Introduction 1
1.2 Problem Statement 1
1.3 Study Question 1
1.4 Study Objective 2
1.5 Study Significance 2
CHAPTER TWO: THEORITICAL BACKGROUND & LITRETURE REVIEW 3
2. Theoretical Background 3
2.1 Concept of Stock Market 3
2.2 Type of Stock Market 3
2.3 Importance of Stock market 4
2.4 Why are Stock Market essential 4
2.5 Function of Stock Market 5
2.6 Stock Market Definition 6
2.6.1 Stock Market Efficiency 7
2.6.2 Type of Stock Market Efficiency 7
2.7 Literature Review 8
2.8 Iraq Stock Exchange Development 10
CHAPTER THREE: RESEARCH METHODOLOGY 12
3.1 Introduction 12
3.2 Purpose of Study 12
3.3 Hypothesis 12
3.4 Scope of Study 12
3.5 Statistical Methods 12
CHAPTER FOUR: RESULTS & DISCUSSION 13
4.1 Introduction 13
4.2 Graphic Check 13
4.3 Descriptive Statistic 16
CHAPTER FIVE: CONCLUSION & SUGGESTION 17
5.1 Conclusion 17
5.2 Suggestion 17
REFERENCE 18
6. VI
LIST OF TABLES
LIST O FIGURES
Figure no. Title Page no.
FIGURE 2.1 Iraq Stock Exchange Main Trading Indicators for Period 2009-2020 11
FIGURE 4.1 Movement of Daily Closing Price 2022-2023 15
FIGURE 4.2 Q-Q Plot of Daily Closing Price 2022-2023 15
Table no. Title Page
no.
TABLE 2.1 Iraq Stock Exchange Main Trading Indicators for Period 2009-2020 11
TABLE 4.1 Iraq Stock Exchange Index Time Series for Period 2022-2023 14
7. 1
CHAPTER ONE
BACKGROUND OF THE STUDY
1.1 Introduction
The stock market efficiency refers to the speed of prices in response to the information
provided to the market; it is moving upward and downward with good and wrong
information which reaches the market at random and independent of each other hence it
will not be able to anticipate the results of its movement to achieve unusual profits,
(Ghalibi & Abod, 2016). There are three categories of stock market efficiency
weak-form, semi-strong-form, and strong-form (Fama, 1970). This sector faces many
challenges like others part in the Iraqi economy due to high levels of corruption, political
instability, terrorism, etc. (Asaad & Marane, 2020).
Several studies concluded that the Iraq stock market does not reflect historical
information, meaning that the existence of an opportunity to get abnormal profits
depends on the historical prices to predict the prices in the future. In another word, most
studies’ outputs found that the Iraq stock exchange is still none efficient in the weak
form (Asaad, 2014; Mohammed & Habib, 2015; Asaad, Marane & Omer,
2015).
The research is arranged in the second section of the literature review. The third section
presents the methodology. While the fourth section discusses the research findings. The
fifth section focuses conclusion and the direction of further studies.
1.2 Problem Statement
Stock market efficiency is an important indicator of financial growth in economics to
attract local or international investors to the market through activating the stock market
to include all available public information avoiding the chance to forecast the stock’s
price in the future based on the past to have a high level of profits. Most of the studies in
developing countries confirmed that their market is still non-efficient at a weak level
(Asaad, 2014), therefore this study comes to check the efficiency at a weak level in the
Iraq stock market as a newly established market after 2004.
1.3 Study Question
Does the Iraqi market exchange give the possibility of achieving unusual profits based
on historical price trends information to predict the future price movement of shares, and
thus consider it an inefficient market at the weak level?
8. 2
1.4 Study Objective
The main objective of this study is to investigate the efficiency of the weak form of the
Iraqi stock exchange after the Covid-19 vaccination discovery.
1.5 Study Significance
This study can be applied to many sectors:
1. Investors and investment portfolio
2. Government
3. Stock Markets
4. Policymakers
5. Corporations
6. Other
9. 3
CHAPTER TWO
THEORITICAL BACKGROUND & LITERATURE REVIEW
2.Theoretical Background
t
arke
M
tock
S
oncept of
C
2.1
It is a place where shares of pubic listed companies are traded. The primary
Definition:
market is where companies float shares to the general public in an initial public offering
)
began publication in 1961
The Economic Times
(IPO) to raise capital (
Once new securities have been sold in the primary market, they are traded
Description:
where one investor buys shares from another investor at the
—
in the secondary market
e
prevailing market price or at whatever price both the buyer and seller agree upon. Th
secondary market or the stock exchanges are regulated by the regulatory authority. In
India, the secondary and primary markets are governed by the Security and Exchange
)
began publication in 1961
The Economic Times
) (
Board of India (SEBI
e facilitates stock brokers to trade company stocks and other securities.
A stock exchang
A stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting
place of the stock buyers and sellers. India's premier stock exchanges are the Bombay
Exchange and the National Stock Exchange.
Stock
2.2 Type of Stock Market
There are two main types of stocks: common stock and preferred stock.
Common Stock
Common stock is, well, common. When people talk about stocks in general, they are
most likely referring to this type. In fact, the majority of stock issued is in this form. We
basically went over features of common stock in the last section. Common shares
represent ownership in a company and a claim (dividends) on a portion of profits.
Investors get one vote per share to elect the board members, who oversee the major
decisions made by management (esjardins de valeurs mobilières (CDVM), 1990)
Over the long term, common stock, by means of capital growth, yields higher returns
than almost every other investment. This higher return comes at a cost since common
stocks entail the most risk. If a company goes bankrupt and liquidates, the common
shareholders will not receive money until the creditors, bondholders, and preferred
shareholders are paid (esjardins de valeurs mobilières (CDVM), 1990)
10. 4
Preferred Stock
Preferred stock represents some degree of ownership in a company but usually doesn't
come with the same voting rights. (This may vary depending on the company.) With
preferred shares investors are usually guaranteed a fixed dividend forever. This is
different than common stock, which has variable dividends that are never guaranteed.
Another advantage is that in the event of liquidation preferred shareholders are paid off
before the common shareholder (but still after debt holders). Preferred stock may also
be callable, meaning that the company has the option to purchase the shares from
shareholders at any time for any reason (usually for a premium), (esjardins de valeurs
mobilières (CDVM), 1990)
Some people consider preferred stock to be more like debt than equity. A good way to
think of these kinds of shares is to see them as being in between bonds and common
shares. (If you don't understand bonds make sure also to check out our bond tutorial.)
2.3 Importance of stock market
The majority of people turn to the performance of a country’s stock market as the best
indicator of how well that economy is doing. Stock markets cover all industries across
all sectors of the economy. This means they serve as a barometer of what cycle the
economy is in and the hopes and fears of the population who generate growth and wealth.
• Stock market have existed for centuries and will no doubt go on being the main
public, regulated marketplaces where people can buy and sell shares of different
companies.
• Of course, today’s markets are very different from share trading in the Dutch
East India Company back in 1602, but stocks still remain the most popular
investment choice thanks to their potential for returns and their opportunity to
invest directly in individual companies.
2.4 Why are stock markets essential?
• Stock markets enable companies to be traded publicly and raise capital. The
transfer of capital and ownership is traded in a regulated, secure environment.
• Stock markets promote investment. The raising of capital allows companies to
grow their businesses, expand operations and create jobs in the economy. This
investment is a key driver for economic trade, growth and prosperity.
• For investors, stock markets provide a way to invest money in order to potentially
earn a share of the company’s profits (knowing that the risk of losses exists too).
Active investors and traders can easily buy and sell their securities due to the
abundant liquidity in most major stock markets
11. 5
2.5 Function of Stock Market
The stock market comprises retail investors, traders, brokers, institutional investors,
researchers, advisors and regulators. For many, the stock market represents an opportunity to
create wealth. From the perspective of a country, stock markets are essential for promoting
investing of savings and driving growth. This article takes a look at various functions of stock
markets/exchange (Ujjwal Jain,2022)
1. Price discovery
One of the most important functions of stock exchanges is bringing buyers and sellers
together in a single place and facilitating price discovery. The role of stock exchanges is
tremendous in creating a place where the impact of all factors that can affect businesses is
incorporated into stock prices. Since the pricing of securities incorporates all relevant factors,
investors, traders, creditors, and governments need not make repetitive assessments.
2. Promotes Investment of Savings
For an economy to grow, the citizens’ savings must be deployed in avenues productive to the
economy, a part of this is taken care of by the banking system that provides loans using
deposits, a smooth and trustworthy stock market would encourage citizens to invest in
businesses that can use this capital to produce more, produce better and employ more. Thus,
stock markets can play a key role in the economic development of an economy.
3. Promotes Better Allocation of Capital
Information if companies in the stock market is easier to obtain as news outlets are likely to
cover any events that might affect their market value. The companies themselves are required
to disclose key information. Investors also get access to information on bulk deals, insider
trades, and holdings of institutional investors and promoters. Additionally, companies can be
divided into various sectors and market cap categories, allowing for simpler comparison.
Thus, investors are empowered to make better decisions and allocate capital to good
businesses.
4. Becoming a medium for foreign investments
In developing countries like India, foreign investments play a crucial role in promoting new
industries and enhancing existing ones. The proceeds can be used to adopt technological
advancements, improve production capacities, hire better talent and enrich the existing
human capital. A stock market that functions smoothly, is regulated against malpractices,
and is transparent can give foreign investors the confidence to invest in the companies of a
particular country. India’s economic growth can benefit from foreign investments. Like most
developing countries, the disposable income in India is lower compared to developed
countries. This makes it difficult to raise capital solely from domestic sources.
5. Driving Economic Growth and being an economic barometer
As mentioned earlier, a well-functioning stock market can help draw investments from
domestic sources. These investments can be employed to improve production capacities and
can help increase job opportunities. Thus, stock markets can help drive the economic growth
of a country. Furthermore, a stock market can act as an economic barometer as the effects of
12. 6
changes in economic growth expectations and significant events are reflected in stock prices.
When economic conditions are favorable, stock prices tend to be rising and vice versa.
6. Liquidity
Liquidation of assets, i.e., converting them into cash, can be a tedious task. Finding a buyer
is difficult, and getting a reasonable bid is even more difficult. But, if the asset in question is
a security that can be traded in the stock market, the situation changes dramatically. Stock
markets help connect buyers and sellers across geographical and socioeconomic boundaries.
This makes it a lot simpler to buy or sell assets.
7. Safe Transactions
Companies listed on stock exchanges are regulated and required to meet certain standards.
Also, investors can expect a basic level of information to be available on all companies in
the stock market. Additionally, regulators and stock exchanges work towards protecting the
interests of investors and limiting malpractices like price manipulation, ensuring the safety of
transactions.
8. Provides Scope for Speculation
Stock markets provide scope for speculation in a fair and regulated manner. Healthy
speculation can help smoothen changes in asset prices. As situations develop, speculative
activity affects asset prices. The change in asset prices happens in phases instead of
skyrocketing or free-falling prices. Also, speculative trades ensure assets remain liquid (easy
to trade).
Final Thoughts
Stock markets represent an opportunity to create wealth for many of us. But that is not all! In
addition to this, they play an important role in driving investments from domestic and
overseas sources. They also bring transparency to asset prices and facilitate safer transactions
of securities.
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2.6 Efficient Market Definition
An efficient market is a place where the market prices of financial instruments like stocks
reflect all information that is available. It also adjusts instantaneously to any new
information that may be disclosed. If this theory holds true, then it is impossible for
traders to consistently outperform a market, as the price movements of the assets cannot
be predicted correctly (Lalit Keshre, Harsh Jain, Ishan Bansal and Neeraj
Singh,2016).
13. 7
2.6.1 Stock Market Efficiency
What participants think of efficient markets depends solely on their individual views as
to whether they can outperform it. This argument orbits around both active and passive
trading approaches.
Investors who are fond of a passive approach are usually inclined to subscribe to the
efficient market theory. Thus, they choose to invest in exchange-traded funds or index
funds. These two offer similar returns when compared to the overall stock market.
Passive investors steer clear from taking huge risks and do not have any intention to
outperform.
These investors will rarely invest through a fund manager irrespective of the expertise.
They believe that those fund managers cannot outperform the market. This doesn’t imply
those fund managers cannot beat the market. Recent studies show that many investors
have succeeded in outperforming the market on a consistent basis.
Now that you have a clear idea regarding market efficiency, it’s for you to decide which
trading approach is best suited for you.
2.6.2 Type of Stock Market Efficiency
According to the efficient market theory formulated by American economist Eugene
Fama, there are three forms of efficiency. They are
Weak form: This form of market efficiency theory suggests that current market prices
of securities reflect their previous or historical prices. Thus, it means that market
participants who are buying and selling securities by analyzing their historical data
should earn normal returns. Hence, any new price changes in future can only take place
if new information becomes publicly available. According to this theory, popular
investing strategies like technical analysis or momentum trading will not be able to beat
the market on a consistent basis. But it proposes that there is room for earning excess
returns by using fundamental analysis (Lalit Keshre, Harsh Jain, Ishan Bansal and Neeraj
Singh,2016).
Semi-strong form: In a semi-strong variation of an efficient market, the current prices
of securities represent all information that is publicly available. It includes historical
information like price, volume and more. This form of theory assumes that securities
make quick adjustments in response to any newly available information. Thus, traders
won’t be able to outperform the market by trading on such information. It dismisses both
technical and fundamental analysis since any information gathered by using these
techniques will already be available to other investors. Only private information that is
unavailable in the market would be useful for an investor to have the edge over others.
Strong form: This form of market efficiency theory states that market prices of
securities reflect public and private information both. Consequently, investors will not
be able to beat the market by trading on any private information since all such
information will already be factored into the market prices of the securities.
14. 8
2.7 Literature Review
A study by Asaad (2014) aimed to examine the efficiency of the weak form of the Iraq
stock exchange (ISX) using the monthly closing price for ten years (2004-2014) with
(2457) observations for the bank sector papulation including all listed individual banks
in the stock market. The study hypothesis was investigated by employing parametric
and nonparametric tests. The findings revealed that all respective banks, in the same
manner, are inefficient at the weak form. As a result, it concluded that all bank listed in
the Iraq stock market does not reflect historical information, meaning that the existence
of an opportunity to get abnormal profits depends on the historical prices to predict the
prices in the future.
Asaad, Marane & Omer (2015) tested the existence of weak-form efficiency of the
Iraq stock exchange using (923) observations of daily closing prices during the period
(2010-2014), the normality and random walk hypothesis applied by a different test such
as Kolmogorov-Smirnov test, Shapiro-Wilk test, Cramer-Von Mises, Watson test,
Anderson-Darling test, Augmented Dickey-Fuller test, Phillips-Perron test, Run test, and
Autocorrelation test. The study outputs found that the Iraq stock exchange is still none
efficient in the weak form. Hence, the study suggested the necessity for the Iraqi market
to work to ensure that all people have access to information at the same time and of the
same quality to avoid giving the possibility of an opportunity to realize unusual profits
as a result of the market’s inefficiency. Mohammed & Habib (2015) in their study
accepted the hypothesis of the study, which states that stock prices in the Iraqi stock
exchange do not reflect the information available to investors about stocks; this means
the inefficiency of the Iraqi stock market at a semi-strong about inflation and exchange
rates level due to publishing data and corporate information after a long
period.
Ghalibi & Abod (2016) determined the Iraq stock exchange efficiency at a weak
level for the daily data period (2014-2005) with (1751) observations. All study results
found that the Iraq stock exchange is inefficient at a weak level using the unit root test
of the Dickey-Fuller test, Phillips-Perron test, and variance test.
The results of AL-Hisnawi & AL –Ebadi (2019) are similar to other studies in the
Iraqi context, which showed that the Iraq stock exchange does not follow the random
walking and it is inefficient within the weak level through using various statistical tests
like the serial correlation test, runs test, variance ratio test, and rescaled range test for the
period (1/1/2015 - 31/12/2017) with (650) observations of (60) companies listed in the
Iraq stock exchange.
Also, Hamed & Mohammed (2021) employed the daily closing price of (31)
industrial listed companies on the Iraq stock exchange to test the efficiency at the weak
level with (2851) observations using the normal distribution and random walking for the
period (1/1/2019 - 31/12/2020), through several statistical tests such as Kolmogorov-
Smirnov test, Shapiro-Wilk test and augmented Dickey-Fuller unit root test. The results
of all tests showed that the Iraqi stock exchange is inefficient at a weak
level.
15. 9
AL-Shakurji & Chaqmaqchi (2019) found that the weekly closing price of the Iraq
stock exchange is absent of normal distribution using statistics Jarque-Bera and does not
follow the random walk using the Augmented Dickey-Fuller test and Phillips-Perron test
for the period (1/5/2016 - 1/5/2019) with (154) observations, therefore the market is
inefficient at a weak level.
Marane in (2022) Iraq stock exchange main trading indicators for period 2009 to 2020.
statistical tests such as Kolmogorov-Smirnov test, Shapiro-Wilk test and augmented
Dickey-Fuller unit root test. The results of all tests showed that the Iraqi stock exchange
is inefficient at a weak level.
Mustafa in (2020) examined the impact of some macroeconomic variables on the general
index of the Iraq Stock Exchange Duration 2005 to 2018. Using multiple regression. The
results of the current study showed a significant inverse between the price oil and the
exchange rate with three Iraq market for securities, and this is consistent with the
economic literature and supports the significant impact of foreign direct investment
flows.
Al-Shara in (2018) examined the ratio of the market value index of Iraqi Islamic banks
to the total market value of the Iraqi financial market for the period 2004 to 2018. Using
the coefficient of determination, studied linear relationship, the independent effect on
the dependent variable, estimated parameter, standard error of the estimated parameter
and indicates the level of morale. A result of the increase in the demand of individuals
investing in the market to buy the shares of Islamic banks in the market, The application
of the investment law in the stock market and the activation of Market database and
electronic trading activity.
Nimr in (2022) measured the reputation of listed firms on the Iraq Stock Exchange
During 2014 to 2019. Using statistical test of research hypotheses Financial Resilience,
ISIS, Firm Size, Sales Volatility, Cash Flow Volatility, Operating Cycle, Sales Growth,
ROA, Loss and National Auditor. The results of this study and investigate other
dimensions of ISIS’s presence in Iraq, including the impact on corporate financial
resilience and their ability to cope with financial crises and the impact of this attack on
future growth.
Salih in (2021) included twenty-six banks for the years from 2010 to 2020. Using to
evaluate the prediction models which are Accuracy (ACC), and Root Mean Squared
Error (RMSE). This indicates that the proposed model had better efficiency.
Abass in (2021) The Iraqi Stock Exchange reality & requirements for improvement a
comparative study of the stocks markets from some Arab countries for the period 2010
to 2019. Using correlation test between market indicators and economic growth Iraqi
Stock Exchange, Saudi Stock Exchange and Egypt Stock Exchange. Results indicate that
the small number of Iraqi stock market companies to a degree that limits the increase in
the volume of investments, which will be reflected in the possibility of improving the
future efficiency of the market negatively.
Othman and Muhammed in (2021) The new version of the ridge regression to estimate
the coefficients of some important economic variables as a real application of stock
market index and macroeconomic variables in Iraq May 14, 2021 to June 29, 2021.
Descriptive analysis of variables Mean, Median, Standard error of the mean, Kurtosis
and Skewness. It is shown that the proposed method of estimation is able to produce
16. 10
consistent results as existing methods of estimation in the presence of multicollinearity
in the data.
the Iraq Stock Exchange during the time 2017 to
studied
2022)
Hassan and Abdali in (
. The results of the study provide
onstant
C
, Size, ROA and
Interest rate
Using
2019.
evidence about the benefits that Iraqi companies achieve as a result of the disclosure of
integrated reports.
Srayyih, Howaidi and Hussain in (2019). Studied the Stock Exchange through the
application of the ARDL methodology for the period January 2013 to September 2018.
Using model diagnostic accuracy t-statistic and F-statistic. The study shows result that
the fluctuations in the price of crude oil indirectly affect the performance of the financial
market.
2.8 Iraq Stock Exchange Development
The Iraq stock market shows high volatility and lack of liquidity because it is a very
young and relatively immature market after being established by order (74) in 2004
(Bash and Al Qureshi, 2017, 197). The ISX share traded about (930) billion shares, the
traded value was about (560) million US dollars with several trades around (114467)
transactions, and the traded stock price index of the market index closed at (569) points.
All statistics indicate the progress of the Iraq stock exchange compared to the previous
period, especially before the lockdown due to covid in (2019) due to an increase in traded
shares number by (102%), the value of traded shares by (186%), and the increase in the
market price index (15%).
However, according to the Arab Federation of Capital Markets (AFCM) annual report
(2021), the Iraqi stock exchange constitutes only the equivalent of (0.064%) of the total
traded value of the sixteen Arab financial markets, even though there is a development
in the general index of the Iraqi market, while the market capitalization of the Iraqi stock
exchange did not exceed (0.28%) of the total market capitalization of the entire Arab
markets capitalization combined, while only Saudi Arabia percentage exceeded (70%)
of total Arab market capitalization. Figure (1) shows the changes in the markets trading
indicators. In contrast, table (1) shows the ISX60 general index with a minimum value
in (2014) and only registers (92) points, which may be due to terrorist activities and the
volatile security situation. The ascent stage began to set records (2015-
2020).
18. 12
RESEARCH METHODOLOGY
3.1 Introduction:
The main purpose of this chapter is to identify a clear methodology approach that assisted
the entire process of the research.
3.2 Purpose of the Study
The study aims to test the prices of the daily Iraq stock exchange index over the period
(2009 – 2020). following normality or not, then to decide whether the Iraq stock
exchange is efficient at weak-form or not.
3.3 Hypothesis
Ho: The Iraq Stock Exchange index follows a normal distribution during the period of
study.
H1: The Iraq Stock Exchange index does not follow a normal distribution during the
period of study.
3.4 Scope of the Study
The study is based on daily closing prices of the Iraq stock exchange for the period
(4/4/2022-4/4/2023) of a total number of observations (243). The daily series was
obtained from (ISX) website to test the hypotheses and explore the results by using
(SPSS) software.
3.5 Statistical Methods
The data was gathered through the different annual reports and periodicals published by
the Iraq stock exchange for ten years which are available on the market’s official website.
Table (4.1) illustrates that the data has been tested by using different statistical tools such
as descriptive statistics, and non-parametrical tests, also descriptive statistics helps to
identify the pattern of the stock market index and its application to show whether the
bank stock prices are normal distribution or not. After descriptive statistics, there are two
non-parametric methods used to test the study hypothesis:
1. Kolmogorov- Smirnov Test
2. Shapiro – Wilk Test
The guideline is rejecting the null hypothesis (H0) means the market does not follow
normality, then can say the stock market is not efficient when the p-value is less than the
α value.
CHAPTER FOUR
19. 13
RESULTS & DISCUSSION
4.1 Introduction
The purpose of this chapter is to provide in detail the results of the data analysis. In
addition, to describe the data of study, the variables inserting will be employed in order to
determine data collection information.
4.2 Graphically Check
The above data have been collected for the purpose of this research about Iraq Stock
Exchange from April 2022 to April 2023. It shows the movement and graphs based on
the normality method and closing prices series were not fixed due the change in the
market.
TABLE 4.1 Iraq Stock Exchange Index Time Series for period 2022-2023
22. 16
Different descriptive statistics have been calculated for the daily closing price series for
the purpose of describing those data. The above table shows the descriptive data that
show the closing prices in Iraq Stock Exchange. The data are not normal nor fixed due
to the continuous changes in the market.
Test of Normality
a
Smirnov
-
Kolmogorov Shapiro-Wilk
Statistic Df Sig. Statistic df Sig.
ISX_Close .121 242 .000 .910 242 .000
a. Lilliefors Significance Correction
CHAPTER FIVE
23. 17
CONCLUSION & SUGGESTION
.
5.1 Conclusion
1.The Iraq stock exchange does not follow normality assumption on the results of using
the kolmogorov-smirnov test, and Shapiro-wilk test in the case of daily prices cover from
4 April 2022 to 4 April 2023.
2. This market has been found weak from non-efficient and gives the possibility of an
opportunity to achieve unusual profits by an investor that exceed what other investor
achieve.
5.2 Suggestion
1. The study proposes for the administration of the Iraq stock exchange to ensure that
dealers obtain information at the same time and of the same quality in order to avoid
giving the possibility of an opportunity to achieve unusual profits by an investor that
exceeds what other investor achieve as a result of the inefficiency of the market at the
weak level.
2. The study proposes to spread awareness and rational thinking of investment
decisions among market dealers through training courses, and workshops in coordination
with various parties in society such as universities.
3. The study suggests using other statistical models to test the hypothesis of market
efficiency at the weak level in Iraq, to ensure that the results may differ when using other
statistical models.
24. 18
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