TERRORIST ATTACKS AND CORPORATE INVESTMENT IN INDONESIA

  • Dat Thanh Nguyen The University of Danang, Vietnam
  • Dinh Hoang Bach Phan La Trobe University, Australia
  • Van Ky Long Nguyen FPT University, Vietnam
Keywords: Terrorism;, Corporate investment;, Sectoral analysis;, Firm characteristics;, Economic significance.

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.

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Published
2021-04-14
How to Cite
Nguyen, D. T., Phan, D., & Nguyen, V. K. L. (2021). TERRORIST ATTACKS AND CORPORATE INVESTMENT IN INDONESIA. Buletin Ekonomi Moneter Dan Perbankan, 24(1), 53-70. https://doi.org/10.21098/bemp.v24i1.1283
Section
Articles