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Bulletin of Monetary Economics and Banking

Document Type

Article

Abstract

Using yearly data from 1997 to 2017, this paper studies the effect of terrorism (number of attacks) on corporate investment in Indonesia. Applying an investment-type model, we show that firms reduce their capital expenditure due to an increase in the number of terrorist attacks. On average, a one standard deviation increase in the number of terrorist attacks reduces corporate investment by 9.23%. We also find heterogenous reactions of firms to terrorism across different sectors and different panels based on firm characteristics. Finally, our main results remain consistent after performing several robustness tests.

First Page

53

Last Page

70

Creative Commons License

Creative Commons Attribution-NonCommercial 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Vietnam

Affiliation

The University of Danang

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