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The normalisation of terror: the response of Israel's stock market to long periods of terrorism
Author(s) -
Peleg Kobi,
Regens James L.,
Gunter James T.,
Jaffe Dena H.
Publication year - 2011
Publication title -
disasters
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.744
H-Index - 70
eISSN - 1467-7717
pISSN - 0361-3666
DOI - 10.1111/j.1467-7717.2010.01203.x
Subject(s) - terrorism , stock market , suicide prevention , psychological resilience , poison control , demographic economics , economics , psychology , medicine , political science , history , medical emergency , social psychology , law , context (archaeology) , archaeology
Man‐made disasters such as acts of terrorism may affect a society's resiliency and sensitivity to prolonged physical and psychological stress. The Israeli Tel Aviv stock market TA‐100 Index was used as an indicator of reactivity to suicide terror bombings. After accounting for factors such as world market changes and attack severity and intensity, the analysis reveals that although Israel's financial base remained sensitive to each act of terror across the entire period of the Second Intifada (2000–06), sustained psychological resilience was indicated with no apparent overall market shift. In other words, we saw a ‘normalisation of terror’ following an extended period of continued suicide bombings. The results suggest that investors responded to less transitory global market forces, indicating sustained resilience and long‐term market confidence. Future studies directly measuring investor expectations and reactions to man‐made disasters, such as terrorism, are warranted.