Influence of Terrorist Activities on Financial Markets: Evidence  from KSE

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

doi:10.5817/FAI2013-2-1

Influence of Terrorist Activities on Financial Markets: Evidence from KSE

Vol.4,No.2(2013)

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

https://doi.org/10.5817/FAI2013-2-1

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Abstract

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.

Keywords:
terrorism; KSE; event study; Pakistan; GARCH

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