Impact of Terrorism on International Stock Markets
نویسندگان
چکیده
This article investigates the impact of terrorist attacks on global capital markets. We find economic consequences of terrorist attacks spillover through trading partners. When a bigger economy (measured by GDP) is targeted, the spillover is specifically prominent for economically smaller trading partners. Such partners see a -2.5% reduction in national stock indices. Odds for smaller trading partners experiencing a negative abnormal stock impact are over 5.7 times greater than other countries. An attacked country’s bigger trading partners do not experience a decline in stock indices. Democratic countries are more vulnerable while country specific trade characteristics do not contribute to spillover.
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