The normalisation of terror: The response of Israel's stock market to long periods of terrorism

Kobi Peleg, James L. Regens, James T. Gunter, Dena H. Jaffe*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


Man-made disasters such as acts of terrorism may affect a society's resiliency and sensitivity to prolonged physical and psychological stress. The Israeli Tel Aviv stock market TA-100 Index was used as an indicator of reactivity to suicide terror bombings. After accounting for factors such as world market changes and attack severity and intensity, the analysis reveals that although Israel's financial base remained sensitive to each act of terror across the entire period of the Second Intifada (2000-06), sustained psychological resilience was indicated with no apparent overall market shift. In other words, we saw a 'normalisation of terror' following an extended period of continued suicide bombings. The results suggest that investors responded to less transitory global market forces, indicating sustained resilience and long-term market confidence. Future studies directly measuring investor expectations and reactions to man-made disasters, such as terrorism, are warranted.

Original languageEnglish
Pages (from-to)268-283
Number of pages16
Issue number1
StatePublished - Jan 2011
Externally publishedYes


  • Israel
  • Man-made disaster
  • Resilience
  • Stock market
  • Suicide bombing
  • Terrorism


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