The Effects of Recent Terrorist Attacks on Risk and Return in Commodity Markets

Vikash Ramiah, Damien Wallace, Jose Francisco Veron, Krishna Reddy, Robert Elliott
  • Energy Economics, October 2018, Elsevier
  • DOI: 10.1016/j.eneco.2018.10.025

Do Terrorist Attacks affect Risk and Return in Commodity Markets

What is it about?

Investigates the effects of the recent terrorist attacks on the commodity market as a whole and addresses economic implications of the attacks

Why is it important?

The objective of terrorists is to propagate fear and discord in global populations through various methods, including financial damage to equity markets. In this paper our objective is to document the effects of terrorist activities on the commodities markets.


Dr Krishna Reddy
University of Waikato

Our study shows that terrorist attacks do not have their intended effect on commodity markets, in that there is little evidence to indicate a short-term effect immediately after an attack (only one abnormal return was observed). However, we do observe the effect of terrorist attacks within a longer time frame, with these effects materialising after 120 days. Not only is there a delayed reaction, but the abnormal returns are positive, indicating that the terrorist activities have an opposite effect to the effect they intended.

Dr Krishna Reddy
Toi Ohomai Institute of Technology

The evidence of the equity markets suggests that markets react instantly to terrorist activities, but our paper shows delayed reactions in commodity markets.This is useful for the traders, investors and the policymakers.

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The following have contributed to this page: Dr Krishna Reddy and Dr Krishna Reddy