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Investigating the Impact of Terrorism on the Stock Market Return Index in Middle Eastern Countries

Document Type : Original Article

Authors

1 PhD Student in International Economics, Department of Economic Sciences, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran

2 Associate Professor, Department of Economic Sciences, Faculty of Economics, Management and Administrative Sciences, Semnan University, Semnan, Iran

3 PhD Student in Economics, Department of Economics, Faculty of Economics and Management, Urmia University, Urmia, Iran

https://doi.org/10.34785/J025.2022.014

Abstract

The stock market plays an important and vital role in forming of capital and the accumulation of small, wandering capitals and directing them to the desired paths in a country's economic systems, corruption, terrorist activities and property rights) affecting stock market returns. Be aware. Political factors, especially terrorist activities, create uncertainty, reduce trust, increase risk perception, reduce investment and foreign trade trust, and cause capital flight. Thus, terrorist attacks reduced corporate profits and confusion among investors, investors leave the stock market, and declining stock market returns. Therefore, it is important to study the relationship between terrorist activities and their impact on stock market returns in the tense Middle East region. Therefore, the purpose of this study is to investigate the impact of terrorism on the stock market return index in the high- risk region of the Middle East during the period 2008-2019 with the generalized torque (GMM) approach. The study results indicate the fact that in accordance with the theoretical expectations of the study, terrorist activities have a negative and significant stock market returns in these countries. From other research results, the variables of real exchange rate and oil price have a negative and significant effect on stock market returns.

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References
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Economic Policies and Research
Volume 1, Issue 2
August 2022
Pages 28-54
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