Terrorism Financing, Recruitment, and Attacks

This paper investigates the effect of terrorism financing and recruitment on attacks. I exploit a Sharia‐compliant institution in Pakistan, which induces unintended quasi‐experimental variation funding terrorist groups through their religious affiliation. The results indicate that higher financing, given location period, generate more attacks same period. Financing exhibits complementarity producing with recruitment, measured data from Jihadist‐friendly online fora machine learning. A supply terror is responsible for increase identified by studying different affiliations operating multiple cities. These findings are consistent organizations facing financial frictions to internal capital market.