Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment in Pakistani Would Like to Express My Gratitude
Terrorism Financing, Recruitment and Attacks: Evidence from a Natural Experiment in Pakistan∗ Nicola Limodioy October 2018 Abstract I investigate the relation between terrorism financing and attacks through a panel of 1,545 Pakistani cities and exogenous variation in a Sharia-compliant funding source. Cities exposed to higher financing experience more attacks, with terrorist organizations reacting to temporary funding flows. Two methods lead to identifying an organization-financing channel. First, a city-organization variation allows: a) dissecting the demand and sup- ply of terrorist attacks, with supply exclusively explaining these results; b) estimating the elasticity of attacks to financing (0.08). Second, a measure of terrorist recruitment, calculated using dark web data and machine-learning, exhibits complementarities with financing in increasing attacks. JEL: H56, G30, D64 Keywords: Terrorism, Finance, Charitable Donations ∗I would like to express my gratitude for their useful suggestions to David S. Abrams, Charles Angelucci, Giorgia Barboni, Bo Becker, Eli Berman, Matteo Benetton, Tim Besley, Jordi Blanes i Vidal, Christopher Blattman, Leah Platt Boustan, Sandro Brusco, Ethan Bueno de Mosquita, Decio Coviello, Ben Crost, Livio Di Lonardo, Will Dobbie, Tiberiu Dragu, Oeindrila Dube, Carlo Ambrogio Favero, Martin Feldstein, Dana Foarta, Thomas Fujiwara, Roberto Galbiati, Tarek Ghani, Nicola Gennaioli, Elisa Giannone, Mariassunta Giannetti, Alan Krueger, Eliana La Ferrara, Simone Lenzu, Alessandro Lizzeri, Rocco Macchiavello, Alberto
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