Subject The article considers the features of terrorist attacks, which have an impact on stock indices. It analyzes 117 terrorist attacks committed in different countries for 1988–2016. Objectives The aim is to assess the impact of terrorist attacks on stock index dynamics. It will enable market agents make better decisions and avoid excessive losses, reduce negative reaction of the market in general, and help the national financial system minimize adverse consequences of terrorist attacks. Methods We employ historical-logical, graphical, statistical methods and a comparative analysis to describe the impact of different features of terrorist attacks on the dynamics of stock indices. We also systematize analytical information in this sphere of knowledge. Results The findings show that the impact of terrorist attacks on stock index dynamics depends on various factors, namely, number of victims, level of country's economic development, day of terrorist attack, etc. We found out that the market trend before a terrorist attack has a significant influence on stock index movement after the attack. The impact of terrorist attacks on different industries is different. Conclusions In many cases, terrorist attacks seriously affect the dynamics of stock indices. However, the influence is often insignificant and impermanent. Therefore, investors should refrain from ill-judged financial decision to avoid losses. The findings may be useful for investors, market-makers and other market participants.
Keywords: stock market, terrorist attack, dynamics, stock index, global threat
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