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How Different Terrorist Attacks Affect Stock Markets

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  • Faheem Aslam
  • Hyoung-Goo Kang

Abstract

Terrorist attacks adversely affect the Pakistani stock market. However, such effect is short-lived: the market recovers from terrorist shocks in one day. The impact of attack depends on the locations and types of attack. The more severe the attack (i.e. more people killed), the more negative is the KSE-100 index return. Most interestingly, stock market contains information about future attacks. In sum, different tactics of terrorists have varied effects on financial markets, which in turn can predict terrorist attacks.

Suggested Citation

  • Faheem Aslam & Hyoung-Goo Kang, 2015. "How Different Terrorist Attacks Affect Stock Markets," Defence and Peace Economics, Taylor & Francis Journals, vol. 26(6), pages 634-648, December.
    • Handle: RePEc:taf:defpea:v:26:y:2015:i:6:p:634-648
    DOI: 10.1080/10242694.2013.832555
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    References listed on IDEAS

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