hero working papers

Terrorism Financing, Recruitment and Attacks

Number: 665
Year: 2020
Author(s): Nicola Limodio
This paper investigates the effect of terrorism financing and recruitment on attacks. A Sharia-compliant institution in Pakistan induces exogenous variation in the funding of terrorist groups through their religious affiliation. I isolate the supply of terrorist attacks by following multiple terrorist groups with different affiliations operating in various cities. Higher terrorism financing, in a given location and period, generates more attacks in the same location and period. This effect increases in recruitment, measured through darkweb data, inputs by two judges and machine-learning. This evidence is consistent with terrorist organizations facing financial frictions to their internal capital market.

Keywords: Terrorism, Finance
JEL codes: G30, H56