Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment

65 Pages Posted: 8 May 2019

See all articles by Nicola Limodio

Nicola Limodio

Bocconi University; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Baffi Carefin Centre, Bocconi University

Date Written: April 2019

Abstract

I present empirical evidence showing that terrorism financing and recruitment promote terrorist attacks. Pakistan offers an ideal setting for this research due to a natural experiment inducing exogenous variation in terrorism financing. In line with terrorist organisations facing financial frictions, I find a correspondence between the timing and location of finance and the attacks by organisations exposed to this transfer. The effect of financing on attacks increases in recruitment, measured by combining dark web data and machine learning. These results suggest that financial counter-terrorism lowers attacks, which I quantify by estimating the elasticity of terrorist attacks to financing (0.25).

Keywords: Terrorism, Finance

JEL Classification: G30, H56

Suggested Citation

Limodio, Nicola, Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment (April 2019). Chicago Booth Research Paper No. 32, 2019. Available at SSRN: https://ssrn.com/abstract=3384109 or http://dx.doi.org/10.2139/ssrn.3384109

Nicola Limodio (Contact Author)

Bocconi University ( email )

Via Roentgen 1
Milano, MI 20136
Italy

HOME PAGE: http://www.nicolalimodio.com

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Baffi Carefin Centre, Bocconi University ( email )

Via Roentgen 1
Milan
Italy

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