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The spectre of terrorism and the stock market

Author

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  • Hanna, Alan J.
  • Turner, John D.
  • Walker, Clive B.

Abstract

Terrorism is a major issue in the 21st century. In this paper we examine the effect of terrorism on the stock market. We go beyond previous studies to explore the spectre of terrorism on the market rather than terrorist activities. Using a narrative-based approach à la Shiller (2019), we find that the spectre of terrorism during the Northern Ireland Troubles reduced returns and increased volatility on the UK stock market.

Suggested Citation

  • Hanna, Alan J. & Turner, John D. & Walker, Clive B., 2022. "The spectre of terrorism and the stock market," QUCEH Working Paper Series 22-10, Queen's University Belfast, Queen's University Centre for Economic History.
    • Handle: RePEc:zbw:qucehw:202210
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    References listed on IDEAS

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    1. Jussi Nikkinen & Sami Vähämaa, 2010. "Terrorism and Stock Market Sentiment," The Financial Review, Eastern Finance Association, vol. 45(2), pages 263-275, May.
    2. Eldor, Rafi & Melnick, Rafi, 2004. "Financial markets and terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 367-386, June.
    3. Wang, Albert Y. & Young, Michael, 2020. "Terrorist attacks and investor risk preference: Evidence from mutual fund flows," Journal of Financial Economics, Elsevier, vol. 137(2), pages 491-514.
    4. Arin, K. Peren & Ciferri, Davide & Spagnolo, Nicola, 2008. "The price of terror: The effects of terrorism on stock market returns and volatility," Economics Letters, Elsevier, vol. 101(3), pages 164-167, December.
    5. Chesney, Marc & Reshetar, Ganna & Karaman, Mustafa, 2011. "The impact of terrorism on financial markets: An empirical study," Journal of Banking & Finance, Elsevier, vol. 35(2), pages 253-267, February.
    6. Alan J. Hanna & John D. Turner & Clive B. Walker, 2020. "News media and investor sentiment during bull and bear markets," The European Journal of Finance, Taylor & Francis Journals, vol. 26(14), pages 1377-1395, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    terrorism; stock market; returns; volatility; narratives;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-

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