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Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment

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  • Limodio, Nicola

Abstract

I present empirical evidence showing that terrorism financing and recruitment pro- mote terrorist attacks. Pakistan offers an ideal setting for this research due to a natural experiment inducing exogenous variation in terrorism financing. In line with terrorist organisations facing financial frictions, I find a correspondence between the timing and location of finance and the attacks by organisations exposed to this transfer. The effect of financing on attacks increases in recruitment, measured by combining dark web data and machine learning. These results suggest that financial counter-terrorism lowers attacks, which I quantify by estimating the elasticity of terrorist attacks to financing (0.25).

Suggested Citation

  • Limodio, Nicola, 2019. "Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment," Working Papers 287, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    • Handle: RePEc:zbw:cbscwp:287
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    More about this item

    Keywords

    Terrorism; Finance;

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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