How Terrorism and Macroeconomic Factors Impact on Stock Returns and Financial Markets: A Case Study of Islamabad Stock

Exchange

Basit Ali

Research Questions/Objectives
To find the impact of terrorism on financial markets. To show the effect of terrorism on Exchange Rate. To see the impact of terrorism on ISE index (capital market). How the consequences influence the stock returns

Research Questions/Objectives

Cont.

It would use daily data on all the financial markets and the terrorist activities. Different aspects of terrorism would be incorporated in this study in terms of the kind of terrorist activity, its intensity, the location of incidence and the target. The study is going to examine the effect of each kind of terrorist activity on stock, forex and money markets separately.

Literature Review
Abadie and Gardeazabal (2001) discovered the fact that there was ten percent deterioration in the per capita GDP. Eldor and Melnick (2004) found that suicidal attacks in Israel and number of people killed had a negative impact on the stock market and foreign exchange market. Chesney et al. (2011) studied the role of terrorism and natural disasters on financial and found the negative repercussions of the terrorist attacks and natural disasters on stock, commodity and bonds market. Gul, et al. (2010) investigated the impact of terrorist attacks on different financial markets.

Variables
Money Supply/ The rate of liquidity Media hype Terrorist threats Interest Rate Exchange Rate Oil Prices Inflation GDP Market Return Influence of US $