Influence of Terrorist Activities on Financial Markets: Evidence from KSE

Usman Bashir, - Inam-ul-Haq, Syed Muhammmad Ahmad Hassan Gillani


This paper investigates the influence of terrorist activities taking place in Pakistan on the KSE (Karachi Stock Exchange) for the period of 01/2005 to 12/2010 using the GARCH & GARCH- EVT to identify the relationship between these two variables; the study establishes that terrorist activities adversely affect the financial markets and in the case of KSE, it is a highly significant relation. The reason why the negative relationship exists is because of the foremost increase in the number of terrorism attacks in Pakistan.


terrorism, KSE, event study, Pakistan, GARCH

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