21st Century Evidence on the Effect of Terror Attacks on Eurozone Stock Markets

Stelios Markoulis

Defence and Peace Economics, 2023, vol. 34, issue 6, 845-862

Abstract: This paper uses the event study methodology to examine whether ‘significant’ terror attacks that occurred in the Eurozone in the 21st century affect stock markets. We find that such events do have a negative effect both on the market of the country suffering the attack, and on the general Eurozone market index. Depending on the method and the market index used, this effect ranges between −0.3% and −0.62% and is concentrated entirely on the day of the attack. We moreover find that this effect is more pronounced and of significance during the first decade of the 21st century. Regression analysis revealed that the most important factor affecting the magnitude of the effect is economic damage resulting from the attack.

Date: 2023
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DOI: 10.1080/10242694.2022.2050040

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