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Does terrorism affect savings? Evidence from Nigeria

Crawford School of Public Policy
Photo by Josebradley24 on Flickr

Event details

ACDE Seminar

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Date & time

Tuesday 19 October 2021
2.00pm–3.30pm

Venue

Online via Zoom

Speaker

Alberto Posso, RMIT

The relationship between terrorism and savings is conceptually ambiguous. Terrorism can (i) lower savings by increasing perceived associated risks or (ii) result in more precautionary savings as a coping strategy. A scarce empirical literature fails to resolve this ambiguity. I address it by differentiating between formal and informal savings. I argue that individuals perceive formal institutions (banks) as more likely to fall to terrorism than informal channels. Therefore, when looking to increase precautionary savings in the aftermath of terrorism, individuals will disproportionally opt for informal avenues. Using data from the Nigerian General Household Survey Panel matched to data from the Global Terrorism Database, I show evidence that supports this hypothesis. I adopt a dose response difference-in-difference model, which exploits the variation in terrorism events within and between 500 5-kilometer-squared locations over 2010-2018. The results are robust to several exercises, including to potential bias from heterogeneous time-dependent and dynamic treatment effects.

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