Terrorism and the Norwegian stock market

Abstract

Terrorism has increased drastically and have almost become a part of our everyday life; how does this affect the Norwegian stock market? In 1970 there was 651 registered terrorism attacks worldwide, in 2016 this number had increased to 13 488. With more and more terrorism attacks, have our reactions changed? In this paper we examine the effects of eleven terrorism attacks from 2001 to 2017 on Oslo Stock exchange. We used event study, a dataset containing all large terrorism attacks this millennium and a dataset with historical stock market data. The results from our study indicates that terrorism affects OSE in a negative matter. Seven of eleven attacks have negative abnormal return the day after the attack. Eight of eleven attacks have significant cumulative abnormal return 0 to 5 days and 0 to 10 days after the attack. Our study finds a relationship between how many killed and injured in the attack and reaction in the stock market, indicating that bigger attacks causes bigger reaction.