TERRORIST ATTACKS AND CORPORATE INVESTMENT IN INDONESIA

Dat Nguyen, Dinh Phan () and Nguyen Van Ky Long ()
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Nguyen Van Ky Long: FPT University

Bulletin of Monetary Economics and Banking, 2021, vol. 24, issue 1, 53-70

Abstract: Using yearly data from 1997 to 2017, this paper studies the effect of terrorism (number of attacks) on corporate investment in Indonesia. Applying an investment-type model, we show that firms reduce their capital expenditure due to an increase in the number of terrorist attacks. On average, a one standard deviation increase in the number of terrorist attacks reduces corporate investment by 9.23%. We also find heterogenous reactions of firms to terrorism across different sectors and different panels based on firm characteristics. Finally, our main results remain consistent after performing several robustness tests.

Keywords: Terrorism; Corporate investment; Sectoral analysis; Firm characteristics; Economic significance (search for similar items in EconPapers)
JEL-codes: G31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:24:y:2021:i:1c:p:53-70

DOI: 10.21098/bemp.v24i1.1283

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