 The Impact of Terrorism on Financial Markets: An Empirical StudyEnsar Agirman, Muhammet Özcan () and Omer Yilmaz Journal of BRSA Banking and Financial Markets, 2014, vol. 8, issue 2, 99-117 Abstract: Uncertainty is one of the factors negatively affecting financial markets. Terrorism and terrorist activities are located in the factors that trigger this uncertainty. The purpose of this study is to investigate the impact of the uncertainties created by terrorist activities on financial markets. In this context, the effects of terrorism on financial market indexes for 35 countries for the period of 2003-2011 are studied. The Global Terrorism Index derived from Vision of Humanity and annual average stock market indexes obtained from World Federation of Exchanges are used. In this regard, firstly, unit root tests were applied to investigate whether variables are stationary or not. Then, Pedroni and Kao cointegration tests were conducted and a long term relationship between variables were found. A causual relationship either from stock markets to terrorist incidents or from terrorist incidents to stock markets has not been observed in the Granger Causality analysis. The results of the analysis shows that the short term effects of terrorist incidents on stock markets are fixed by the market mechanism in the long term. Keywords: Terrorism; Financial Markets; Panel Data Models (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bdd:journl:v:8:y:2014:i:2:p:99-117 Access Statistics for this article More articles in Journal of BRSA Banking and Financial Markets from Banking Regulation and Supervision Agency Contact information at EDIRC. |
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