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Core and Periphery -- The Dual Effect of Terror

Author

Listed:
  • Shoham Amir

    (Temple University)

  • Rosenboim Mosi

    (Ben-Gurion University of the Negev)

  • Malul Miki

    (Ben-Gurion University of the Negev)

  • Saadon Yossi

    (Sapir Academic College and Bank of Israel)

Abstract

In this paper we analyze the impact of terrorist attacks conducted in Israel during the Second Intifada (2000-2006) on the Israeli stock market. The impact is assessed by differentiating between attacks in the center of Israel (what is termed here the core region) and attacks in the periphery (the southern and northern areas of the country). We use the event study technique to evaluate the effects of the attacks on abnormal returns on the Israeli stock market. Our major finding is that a terrorist attack in the center of Israel has a significant negative effect on the stock market on the day it happens and a significant cumulative negative effect for several days afterward. However, when the attack takes place in the periphery, it has a less significant effect and no lasting impact after the first day.

Suggested Citation

  • Shoham Amir & Rosenboim Mosi & Malul Miki & Saadon Yossi, 2011. "Core and Periphery -- The Dual Effect of Terror," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 17(1), pages 1-15, September.
    • Handle: RePEc:bpj:pepspp:v:17:y:2011:i:1:n:9
    DOI: 10.2202/1554-8597.1220
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    References listed on IDEAS

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    Cited by:

    1. Benchimol, Jonathan & El-Shagi, Makram, 2020. "Forecast performance in times of terrorism," Economic Modelling, Elsevier, vol. 91(C), pages 386-402.
    2. Kollias Christos & Papadamou Stephanos & Psarianos Iacovos, 2014. "Rogue State Behavior and Markets: the Financial Fallout of North Korean Nuclear Tests," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 20(2), pages 267-292, April.
    3. Al-Ississ Mohamad, 2015. "The Cross-Border Impact of Political Violence," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 21(2), pages 239-272, April.

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