Effect of Terrorism Financing on Selected Global Indices: The Case of 2015 Paris Attacks

Literature Review

Researchers discussed a lot how the world financial markets are effected by the waves of terrorism. The most important terrorist attack of Nine Eleven was widely discussed in the literature by Nikkinen et al. (2008), Jackson (2008), Charles and Darné (2006) and Chen and Siems (2004). All are of the view that these attacks negatively affected the global stock markets.

Barry and Nedelescu (2006) highlighted the international awareness of the danger of terrorism on financial markets. The study argued that a sound, diversified and liquid markets counter the effects of terrorist attacks within short time frame. Thus, matured stock exchanges absorbed terrorist attacks more efficiently. Similarly, for the period 1990-2003, Eldor and Melnik (2004) discussed the impact of 639 attacks in Israel. The study found a significant adverse impact of suicide attacks on capital markets. However, swift government intervention and nature of the market helps in efficient market operation.