Exploring the effect of terrorist attacks on markets

Halkos, George and Zisiadou, Argyro (2016): Exploring the effect of terrorist attacks on markets.

Abstract

The aim of this paper is to explore the determinants of terrorist unexpected events and if these events can affect economic markets. Based on the existing literature and the methodologies already been used, our purpose is to draw some attention to specific events, which may create losses to investors or even to countries. Specifically, after a thoughtful consideration of the existing relative studies, we discuss a number of empirical findings concerning the main determinants of terrorism. In particular, religions and especially fanatics is the most common determinant followed by the economic perspective of an attack. We show that the more democratic and developed countries are inclined to decrease the spread on the returns. Relying on these empirical findings, we discuss the implied policy implications and the necessary further research.

• Item Type: MPRA Paper
• Language: English
• Keywords: Terrorism; market reactions; investors; event study; religions; regimes.
• Subjects: G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency ; Event Studies ; Insider Trading; H - Public Economics > H1 - Structure and Scope of Government > H12 - Crisis Management; H - Public Economics > H5 - National Government Expenditures and Related Policies > H56 - National Security and War; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries

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