Stock Market Reaction to Terrorist Attacks and Political Uncertainty: Empirical Evidence From the Tunisian Stock Exchange

Moussa, F. Ben; Talbi, Mariem

doi:10.32479/ijefi.7968

Cited by 8 publications

(20 citation statements)

References 55 publications

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“…Besides, a study showed a strong influence of terrorism acts on the behavior of ten sectorial stock indices return to Tunisian benchmark index (TUNINDEX) using the daily data for the period (2010-2016) (Zaiane, 2018). Moreover, a study used daily data for two sub periods before and after revolution and the output shows that the terror acts affect the performance and volatility of the Tunisian market performance especially after the revolution (Moussa & Talbi, 2019). After all, the above findings are confirmed by another study done on twelve stock markets which were divided into developed, emerging and frontier market for the period (2008-2015) with global terrorism index (GTI).…”

Section: Terrorism and Stock Marketmentioning

confidence: 99%

“…There are many empirical studies related to the determinants of stock exchange progress in developing countries (Cherif & Gazdar, 2010;Moussa & Talbi, 2019). Several of the previous studies have concentrated on the determinants of stock market performance in developed and developing countries based on the Arbitrage Pricing Theory (APT) which showed that the stock market was effected by many factors (Asaad, 2017), and the first study employed this theory to estimate United State stock returns for the period (Chen, Roll & Ross, 1986).…”

Section: Literature Review and Hypothesesmentioning

confidence: 99%

“…In general, stock market declines from terrorist activities and make investors unwilling to keep their business in case of unpredictable future events (Geyikci & Tepeci, 2017). Moreover, terrorism events produce uncertainty and high risk for investments which adversely influence the financial markets then decreasing economic growth (Moussa & Talbi, 2019).…”

Section: Terrorism and Stock Marketmentioning

confidence: 99%

“…Overall, the good governance and political stability attract capital to the state, increasing market share to achieve a desirable level of economic development and better business environment . Consequently, the stability of state political system becomes one of the interesting topics and is considered one of the determinants of the financial markets in the emerging and developing countries (Cherif & Gazdar, 2010;Modugu & Dempere, 2020;Moussa & Talbi, 2019;Yartey, 2008). According to the investors' and researcher's viewpoint, political risk is an effectual factor for pricing asset (Chen et al, 2005).…”

Section: Political Stability and Stock Marketmentioning

confidence: 99%

“…Iraq is still considered a country which is at high levels of political risk in international classifications by institutions which are specialized in risk assessment for the study period ranging (2004)(2005)(2006)(2007)(2008)(2009)(2010)(2011)(2012)(2013)(2014)(2015)(2016)(2017)(2018). This means that the impact of the & Gazdar, 2010; Girma & Shorland, 2008;Gunay, 2016;Modugu & Dempere, 2020;Moussa & Talbi, 2019;Yartey, 2008;Zaiane, 2018) or oil price (Berk & Aydogan, 2012;Bjornland, 2009;Creti, Ftiti & Guesmi, 2013;Eryigit, 2009;Hammoudeh & Li, 2005;Marane, 2015;Nguyen, Nguyen & Nguyen, 2020;Oskooe, 2011) on the development of stock market. However, these results are still inconsistent and non-consensus.…”

Section: Introductionmentioning

confidence: 99%

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Corruption, Terrorism and the Stock Market: The Evidence from Iraq

Asaad¹,

Marane²

2020

JAFEB

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The current study explains how corruption, terrorism, political stability and oil price has an effect on on the Iraq stock exchange utilizing corruption perception index as a proxy of corruption, global terrorism index as proxy for terrorism, political stability and oil price with ISX60 index as proxy of stock market for the period (2005-2019) using Ordinary Least Square method. The results show that the level of corruption, terrorism activities and political stability coefficient is significantly positive with Iraq stock exchange. In contrast, the oil price coefficient is significantly negative with Iraq stock exchange, which means that lower levels of corruption, less terrorism activities and more stability in political system have strong influence on stock market development in Iraq. The study concludes that the explanatory variables are important for Iraq stock exchange. Hence, the study suggests the policy makers to develop stock market by implementing policies and strategies to overcome high level of corruption, terrorism activities especially after ISIS/ISIL announcement has been made public. There is a need for transparency and creating stable political environment through good governance practices in order to attract more foreign investment and promote economic development. Factors like terrorism and corruption make economic and political systems unstable and has an adverse effect on on Iraq's stock exchange performance.

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Section: Terrorism and Stock Marketmentioning

confidence: 99%

Section: Literature Review and Hypothesesmentioning

confidence: 99%

Section: Terrorism and Stock Marketmentioning

confidence: 99%

Section: Political Stability and Stock Marketmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Corruption, Terrorism and the Stock Market: The Evidence from Iraq

Asaad¹,

Marane²

2020

JAFEB

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An analysis of spatial effects of terrorism on stock market returns in the Middle East countries

Rezazadeh,

Nikpey Pesyan,

Karami

2023

IMEFM

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Purpose Stock markets are highly sensitive to foreign and domestic events. Stock exchange markets react promptly to news and are known as an indicator of good and bad trading conditions. Terrorist attacks leave adverse effects on the economy and cause stock price volatility and, consequently, stock return volatility. Therefore, this paper aims to analyze the spatial effects of terrorism on stock market returns in the Middle East from 2008 to 2019. Design/methodology/approach This paper uses analytical research design and estimates spatial model. Before estimating the spatial model, the spillover effects were confirmed for the spatial autoregressive model using Moran’s diagnostic test for spatial dependence, Geary’s C test and Akaike statistic. Findings The results of this study on spatial panel data and based on spatial autoregressive estimator indicated that terrorism and associated neighborhood effects had a negative impact on stock returns in Middle East countries. Also, the corruption index and oil price negatively affected stock market return in these countries, while the democracy index had a positive effect on stock market returns. According to the results, to achieve a high and stable stock market return, it is recommended that high-level consultation is pursued with leaders of involved countries to reduce the devastating effects of terrorist activities, increase political and economic stability, attract stockholders to stock markets and spend corresponding incomes developing the infrastructures in this sector in countries of this region. Originality/value Most of the studies have investigated the impact of terrorism on the stock market returns at the national or provincial level. However, the effect of terrorism on the stock market index in the tense region of the Middle East, which is the center of terrorist attacks in the world, has not been dealt with by considering the spatial econometric effects. Thus, to the best of the authors’ knowledge, this research is a first attempt to study the impact of terrorism on the stock market returns in Middle East countries using the spatial econometric approach.

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The impact of political instability driven by the Tunisian revolution on the relationship between Google search queries index and financial market dynamics

Trichilli

Abbes

Zouari

2020

JCMS

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PurposeThis paper examines the impact of political instability on the investors' behavior, measured by Google search queries, and on the dynamics of stock market returns.Design/methodology/approachFirst, by using the DCC-GARCH model, the authors examine the effect of investor sentiment on the Tunisian stock market return. Second, the authors employ the fully modified dynamic ordinary least square method (FMOL) to estimate the long-term relationship between investor sentiment and Tunisian stock market return. Finally, the authors use the wavelet coherence model to test the co-movement between investor sentiment measured by Google Trends and Tunisian stock market return.FindingsUsing the dynamic conditional correlation (DCC), the authors find that Google search queries index has the ability to reflect political events especially the Tunisian revolution. In addition, empirical results of fully modified ordinary least square (FMOLS) method reveal that Google search queries index has a slightly higher effect on Tunindex return after the Tunisian revolution than before this revolution. Furthermore, by employing wavelet coherence model, the authors find strong comovement between Google search queries index and return index during the period of the Tunisian revolution political instability. Moreover, in the frequency domain, strong coherence can be found in less than four months and in 16–32 months during the Tunisian revolution which show that the Google search queries measure was leading over Tunindex return. In fact, wavelet coherence analysis confirms the result of DCC that Google search queries index has the ability to detect the behavior of Tunisian investors especially during the period of political instability.Research limitations/implicationsThis study provides empirical evidence to portfolio managers that may use Google search queries index as a robust measure of investor's sentiment to select a suitable investment and to make an optimal investments decisions.Originality/valueThe important research question of how political instability affects stock market dynamics has been neglected by scholars. This paper attempts principally to fill this void by investigating the time-varying interactions between market returns, volatility and Google search based index, especially during Tunisian revolution.

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Stock Market Reaction to Terrorist Attacks and Political Uncertainty: Empirical Evidence From the Tunisian Stock Exchange

Cited by 8 publications

References 55 publications

Corruption, Terrorism and the Stock Market: The Evidence from Iraq

Corruption, Terrorism and the Stock Market: The Evidence from Iraq

An analysis of spatial effects of terrorism on stock market returns in the Middle East countries

The impact of political instability driven by the Tunisian revolution on the relationship between Google search queries index and financial market dynamics

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