Terrorism and capital flows: the missed impact of terrorism in big cities

Abstract

This study investigates the effects of four types of terrorist attacks on three types of capital flow. We extend the literature by introducing a new measure of terrorist attacks, namely 'attacks in big cities' and empirically investigate its impact on capital flow. Drawing from a sample of seven South Asian countries over a time period of 27 years spanning 1990-2016, we found that terrorist attacks in big cities and capital flows are negatively related. In particular, the results show that terrorist attacks in big cities, in comparison to the other terrorist attacks forms, have the highest negative impact on the three types of capital flow. 2020 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.