Effect of terror events on capital market

In the study, the effect of terrorism on capital market has been examined. In the implementation, panel data analysis was performend as part of the years 2014 and 2016. The dependent variable is the equity issue index value of the 89 countries that can be accessed from the countries in the global terrorism database. The independent variable is the global terrorism index values of countries which has been published by Vision of Humanity. Our control variables are gross national product, consumer price index, and current account balance which are selected from the macroeconomic factors that are effective on share earnings. Existing literature mostly use the terrorist incidents which have been published in the Global Terrorism Database on a daily basis, but there have been no studies which use the values of the countries' Global Terrorism Index. We find positive but insignificant relationship between terror events and stock markets. In conclusion terrorism has no significant impact on financial markets. In addition, only consumer price index affects financial markets in a positive way and this impact is statistically significant. Other control variables do not have significant effect on financial markets.