Terrorism Financing, Recruitment, and Attacks

Journal Article
Published on 28 July 2022
Authors
Nicola Limodio

An open access version of this article is available here from Econometrica. The working paper for this article is available here.

Abstract

This paper investigates the effect of terrorism financing and recruitment on attacks. I exploit a Sharia-compliant institution in Pakistan, which induces unintended and quasi-experimental variation in the funding of terrorist groups through their religious affiliation. The results indicate that higher terrorism financing, in a given location and period, generate more attacks in the same location and period. Financing exhibits a complementarity in producing attacks with terrorist recruitment, measured through data from Jihadist-friendly online fora and machine learning. A higher supply of terror is responsible for the increase in attacks and is identified by studying groups with different affiliations operating in multiple cities. These findings are consistent with terrorist organizations facing financial frictions to their internal capital market.

Authors

Nicola Limodio

Universita' Bocconi