The Impact of Terrorist Attacks on International Stock Markets

Dirk Brounen · Jeroen Derwall

224 citations0/0 files storedEuropean Financial Management

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Financial Markets and Investment Strategies Financial Risk and Volatility Modeling Market Dynamics and Volatility

Abstract

Abstract We examine the effects of terrorist attacks on stock markets, using a dataset that covers all significant events and that directly relate to the major economies of the world. Our event study suggests that terrorist attacks produce mildly negative price effects. We compare these price reactions to those from an alternative type of unanticipated disaster, earthquakes, and find that price declines following terror attacks are more pronounced. However, in both cases prices rebound within the first week of the aftermath. We also compare price responses internationally and for separate industries, and find that reactions are strongest for local markets and for industries that are directly affected by the attack. Our results suggest that financial markets react strongly to terror events but then recover swiftly and soon return to business as usual. The September 11th attacks turn out to be the only event that caused long‐term effects on financial markets, especially in terms of industries' systematic risk.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 224 citations exist upstream.

References

1985Using daily stock returns 1969The Adjustment of Stock Prices to New Information 2003The Adjustment of Stock Prices to New Information 2001Have Individual Stocks Become More Volatile? An Empirical Exploration of Idiosyncratic Risk 2003Herd Behaviour and Cascading in Capital Markets: a Review and Synthesis 1998The Event Study Methodology Since 1969 2004The macroeconomic consequences of terrorism 2004The effects of terrorism on global capital markets

Cited by

2019Do Asian emerging stock markets react to international economic policy uncertainty and geopolitical risk alike? A quantile regression approach 2013The effects of terrorism and war on the oil price–stock index relationship 2020Terrorist attacks and investor risk preference: Evidence from mutual fund flows 2015War and stock markets: The effect of World War Two on the British stock market 2020COVID-19 Pandemic and Stock Market Response: A Culture Effect 2019

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.