How do terrorist attacks affect the financial markets?Show full item record
Title | How do terrorist attacks affect the financial markets? |
---|---|
Author | Aldridge, Courtney |
Date | 2017 |
Abstract | Since the creation of the New York Stock Exchange in 1817, the world has been using the US financial markets as a leading indicator and measurement of global economic health. As the world becomes increasingly connected due to globalization, we see a correlation between different international stock markets. Since 2000, we have seen a significant increase in the number of terrorist attacks around the world. In addition to emotional damage, terrorism also has severe financial repercussions, which we often see reflected in the stock markets. Terrorism can have varying effects on the financial markets and different sectors, and while they are typically negative, there are some sectors that terrorism can even have a positive effect on. In my thesis, I will be researching the short-term effects of terrorism on the US financial market, specifically analyzing the S&P 500 index. While it is clear that terrorism causes movements in the overall stock market, these movements often differentiate by sector. I will be looking at the S&P 500, and how it reacts immediately to terrorist attacks. While looking at how the index responds to terrorist events, I will also analyze how the magnitude, media, and location of a terrorist attack effects the stock market. I understand that many factors affect the stock market and narrowing in on the particular financial effects of terrorism may cause a challenge there. Thus far, many analysts, economist, and other academics have performed significant research looking at the short-term market reaction to terrorism. Terrorism often increases fear and therefore volatility. Many academic sources have analyzed the correlation between the global markets and how terrorism affects them. Many of these research studies look specifically at September 11th and the effects it had that echoed around the globe. As terrorism has unfortunately increased, I want to analyze how the markets' reactions have changed over time. This question is relevant because terrorism has become an increasingly more prevalent problem around the world. While we usually see an initial reaction by the markets and then a return to previous levels, I want to analyze if the reaction of the S&P 500 to a terrorist attack is significant. Core indices usually correct themselves over time, as political fear decreases often leading to a decrease in economic fear as well. For future reference, I will be defining short-term as 24 hours after the event, medium-term as after 24 hours to 5 days after the attack, and lastly long-term will be referenced as the time after the 5 trading days following the attack. Since I am focusing in on the reactions of the S&P 500, I will filter my research to concentrate mostly on terrorist attacks that occurred in Western Nations and/or were a direct attack on the United States as a nation. The specific research question that my thesis hopes to answer is, what are the short-term effects that terrorism has on the financial markets, specifically observed by analyzing the S&P 500? |
Link | https://repository.tcu.edu/handle/116099117/19844 |
Department | Finance |
Advisor | Wood, Barbara |
Additional Date(s) | 2017-05-19 |
Files in this item
This item appears in the following Collection(s)
- Undergraduate Honors Papers [1362]
© TCU Library 2015 | Contact Special Collections |
HTML Sitemap