PARIS TERRORISME ATTACKS: INTERDISCIPLINARY STUDIES OF INSIDER TRADING AND MONEY LAUNDERING ON GLOBAL SCALE

In this paper, we investigate past research and the development of knowledge and practice in the area of countering money laundering and terrorist financing. Additionally, we draw attention to the gaps in the preventive mechanisms adopted by countries to fight against AML & ATF and to highlight areas for possible future research. There are various avenues to invest and one of those is Stock Market. But the decision of the investor depends on various factors. One of the factors which affects the behavior of investment is Terrorism. The paper focuses on short run and long run association and influence of terrorism on major global stock indices and Gold. We have taken Paris attacks of 2015 as base and ARDL model is used to study the short run and long run impact on the selected stock indices. We find that terrorism has got short run impact on the global indices but there is no long run impact.


INTRODUCTION
Europe is facing an escalating threat from jihadi terrorism. There has never been higher numbers of attack plots per year than in  Terrorism has a long history (Forman 2006). In recent years, extremely disastrous terrorist attacks are observed. Besides the loss of human life and property, terrorist acts have large number of indirect effects on society and economy (Gilmore 1995). It is expected to have an adverse impact on investor confidence, and thus leading to wide ranging impact on financial markets (Nikkinen & Vähämaa 2010).
Terrorism is a critical global issue, directly and indirectly affecting the world (Corbet, Gurdgiev & Meegan 2018). Countries are increasingly more conscious of risks faced by terrorism, seeking to limit and control terrorist agendas, limit damage to public properties, and loss of thousands of innocents, soldiers, politician's government official lives (Leong 2016). Impacting foreign investors confidence to invest in the countries subject to terrorist activities, and inducing local investors to move their investment to more stable and less disruptive financial environments, terrorism's effect on stock markets is great and has been shown to impact variables such as liquidity, returns and stock market volatility (Ouadghiri & Peillex 2018).
This topic is therefore of considerable interest among investors seeking to understand the effects of terror shocks to stock exchanges and to which country they should invest their money (Koo 2020). The objective of the study are to examine the effect of different terrorist attacks on terrorism financing framework, to undertake a comparative analysis of the intensity of each category of terrorist attack on Stock Exchange, and to suggest potential measures to regularities and policy makers of terrorist attack. Incidences like terrorists' attacks that effect the economy also have serious effects on capital markets. Decisions to purchase and sell can be easily reversed. When information is available about a terrorist attack, investors often flee the market in search of safer heaven which leads to panic selling with its consequences . This panic may lead to chaos that leads to a long-term or short term bearish trend. The markets in other countries where these investors go in the expectation of safer investment may tend to become a bull market. With increasing globalization countries of the world are integrated and any occurrences in one country will have impact in other countries of the world. That's the reason why it is generally quoted that when US sneezes, entire world catches cold (Tranfield, Denyer and Smart 2003

REVIEW OF LITERATURE
The indirect economic consequences of terrorism on global financial markets have received considerable attention in the academic literature over the past few years. Several studies have examined the effects of terrorism on stock markets. Chen and Siems (2004), Maillet and Michel (2005), Charles and Darné (2006), Johnston and Nedelescu (2006), and Nikkinen, Omran, Sahlström, and Äijö (2008) demonstrate that the major stock markets throughout the world were negatively affected by the September 11 terrorist attacks.
Due to globalization, terrorist attack in one country has a significant impact on stock market indices of other countries Kumar and Liu, 2013). The impact on other countries stock market depends on the level of integration between the two countries (Kumar and Liu, 2013). Chaudhry et al. (2018)  Chesney, M., Reshetar, G., & Karaman, M. (2011), did an empirical study on the impact of terrorism on the behaviour of stock market, bond market and commodity markets. They took 25 countries terror attack for the time period of more than 11 years. Event study approach, a non-parametric methodology, and a filtered GARCH-EVT approach is used here. They found that a non-parametric approach is the most appropriate method among the three for analyzing the impact of terrorism on financial markets.
Risk diversification by investors in their investments are also found by them in doing this research . Kumar, Sanjay and Liu, Jiangxia (2013) worked on impact of terrorism on global capital markets. When a larger economy is measured by GDP, the spill over is specifically prominent for economically smaller trading partners. It will see a reduction in -2.5% of national stock indices. Jackson, O. A. (2008) deals with aftermath of 9/11 attacks at U.S. He tells the overall impact that America met after the great terror incident. Impact on stock market is also shown covering U.S economy and tourism too. Chen, Andrew and Siems, Thomas (2004) examined 14 terror attacks to U.S capital market. Even they included Kuwait attack of 1990 and 9/11 American tragedy. They founded that U.S market will recover soon than any other capital markets due to stability in banking sector and sufficient liquidity in order to make market stable and avoid panic. Johnston, Barry and. Nedelescu, Oana (2005) quotes about the international awareness of the danger of terrorism and its effects on markets. They told the reaction of the market to various attacks. Matured stock exchanges did observe the attack and they were efficient in doing that. Eldor and Melnik (2004) examined the impact of 639 attacks between 1990 to 2003 on stock market and foreign exchange market. Even suicide attacks had impact on stock markets ,as did the victims. Some researchers like Hammoudeh and Li (2008) and (Inclan and Tiao, 1994) studied its volatility impacts using Cumulative Sum of Squares (ICSS), ARCH and GARCH models.
A literature review of past studies aimed to collect and examine the laws using technical or argument methods; most of the papers lack a real evaluation of the state of money laundering or terrorist financing events, most likely due to the lack of statistical data (Kiser 2005). In this review, we aim to contribute to answering the following questions: a)  Upon searching google scholar, under the keywords of "review of the literature on AML & ATF or financial economic crimes", no paper was found to extensively review the subject from the perspective of our study or even from a general perspective (Tofangsaz Indonesian

RESEARCH METHOD
Most of the researchers focused on the volatility of the benchmark with respect to terrorism, economic impact after the terrorism, reaction of international indices after the major terror attacks, impact of terrorist attack on US stock markets (DeNichilo 2021). Paris Terrorism Attacks ….. 8 where C(L) = 1 − γ 1 L − γ 2 L 2 − · · · − γ p L p and B(L) = β 0 + β 1 L + β 2 L 2 + · · · + β r L r ARDL model shows the whether there is any association between attacks and the index of the particular countries. We have taken Paris attacks and its effects on stock indices of five countries. The five indexes considered are DJI, FTSE, N225, DAX and BSE.
The stock market index of Paris CAC is taken as independent variable and the dependent variable being the index of that particular country. After this, Serial Correlation LM test is considered to know the probability significance. In case the Serial correlation LM test does not satisfy the level, then we go to CUSUM test, which is a graphical representation of long run and short run association between the variables. Finally, Wald test is used to determine long or short run impact and association due to terrorism (Zubair, Oseni and Yasin 2015).   Table 2. The table 2 illustrates the short or long run association between CAC and FTSE by using ARDL model and bound test. The F-statistic for the models is observed to be significant at 5% level i.e., p-value is seemed to be less than 0.05. The table 2 illustrates the short or long run association between the FTSE with CAC by using ARDL model and bound test. The F-statistic for the model is observes to be significant at 5% level and i.e., p-value is seemed to be less than 0.05. Further analysis signifies that fourth lag is considered to be optimum lag selection which deriving the values of AIC (11.30) and SIC (11.45). Hence concluded this model is fit for the lag 4.

Source: Compiled through Eviews
In least square the probability value is greater than 0.05 which means this model has no serial correlation. In these results, the plotted points fluctuate between the upper and lower limit i.e., between the red line which signifies that the model is in control limit to the check long and short run association between the variable.  FTSE with CAC having short run association.
The ARDL model results of Paris attacks on the NIKKEI are summarized in Table   3. The table 3 illustrates the short or long run association between CAC and NIKKEI by using ARDL model and bound test. The F-statistic for the models is observed to be significant at 5% level i.e., p-value is seemed to be less than 0.05. In least square the probability value is greater than 0.05 which means this model has no serial correlation. In this results, the plotted points fluctuate between the upper and lower limit i.e., between the red line which signifies that the model is in control limit to the check long and short run association between the variable.   In least square the probability value is greater than 0.05 which means this model has no serial correlation. In these results, the plotted points fluctuate between the upper and lower limit i.e., between the red line which signifies that the model is in control limit to the check long and short run association between the variable. The ARDL model results of Paris attacks on the BSE (Bombay) are summarized in Table 5. The table 5 illustrates the short or long run association between CAC and BSE by using ARDL model and bound test. The F-statistic for the models is observed to be significant at 5% level i.e., p-value is seemed to be less than 0.05.   In least square the probability value is greater than 0.05 which means this model has no serial correlation. In these results, the plotted points fluctuate between the upper and lower limit i.e., between the red line which signifies that the model is in control limit to the check long and short run association between the variable.
Source: Compiled through Eviews The above table F-statistic values (3.47) as compared with critical value at % per cent level observes that F-statistic is more than upper bound value (4.85). Hence concluded that Null hypothesis has been rejected and alternative hypothesis has been accepted i.e.
BSE with CAC having short run association.
The ARDL model results of Paris attacks on the Gold are summarized in Table 6.
The table 6 illustrates the short or long run association between CAC and gold by using ARDL model and bound test. The F-statistic for the models is observed to be significant at 5% level i.e., p-value is seemed to be less than 0.05.  The above table illustrates the short or long run association between the Gold with CAC by using ARDL model and bound test. The F-statistic for the model is observes to be significant at 5% level and i.e., p-value is seemed to be less than 0.05.

Source: Compiled through Eviews
In least square the probability value is greater than 0.05 which means this model has no serial correlation. In these results, the plotted points fluctuate between the upper and lower limit i.e., between the red line which signifies that the model is in control limit to the check long and short run association between the variable. GOLD with CAC having short run association. In the next stage a comparison of pre and post attack returns is done using Miller Modigliani Approach. Table 7 gives the comparison of pre and post Paris attack returns. We find in case of DJI that there is slight decline in returns in Dec 2015 and in January 2016 the returns were negative but it picked up after that and for almost all the months except January the returns were higher. The yearly average returns were also higher than the pre attack period. For FTSE also we have similar results. There was decline in January but overall, there was increase. NIKKI declined in December and January but later on reversed and finally overall average for the year it also increased. DAX and CAC also showed similar result but BSE increased during December Gold increased marginally.

CONCLUSION
It has been observed from the research that terrorist attacks have got short term impact on the stock indices of other countries as well as of the same country (Prasad, Narayanasamy, Paul, Chattopadhyay, and Saravanan 2018). It has also got short run negative impact on the returns but finally in the long run there is no impact either on stock indices as well as its returns. This result has got an important implication on the investors decisions i.e. it suggests that in case of any such eventuality when returns are negative and indices are falling rather than losing all hopes and squaring their positions in losses the result suggests them to wait for some time when the impact eventually tapers out and indices are back on growth path (Rider, Alexander, Bazley, and Bryant 2016).
Therefore, this paper tries to further explore the scope of possible future research on AML & ATF. For example: a) More focused studies on detecting schemes using machine learning are needed; b) Using an artificial intelligence system to identify potential ML/TF accounts; c) Examining alternative remittance systems, their risks and how to properly control them; d) Study of predicate offense typologies; e) Examining pyramid marketing and its role in AML & ATF and the lack of laws in some countries to criminalize it (comparison between Sharia and law).
The paper contributes significantly to scholars and professional practitioners by providing insights through a detailed systematic review of the existing research studies on AML & ATF. First, the paper provides a comprehensive and detailed description of the available literature on the subject. Then, the paper describes the nature of the available studies and clearly discusses the gaps in the literature. Finally, the paper points out the directions for future research that may enable impactful studies on AML & ATF to be published in top-tier journals. To the best of our knowledge, this study is the first to make a detailed review of what has been studied so far in AML & ATF and to identify scope for further research work. This review has several implications. First, the paper reveals that there are gaps in both regulations and legislative laws and the technology used by countries to fight money laundering and terrorist financing. Second, the paper clearly shows the need for cooperation among different parties and entities in the war against ML/TF. Third, one purpose of this study was to more deeply examine the phenomenon of ML/TF, which remains relatively underexplored in different dimensional contexts. Finally, we provide the elements to initiate more quality research on AML & ATF. The issues discussed in the suggested research agenda could help to provide more sophisticated elements to fight money laundering and terrorist financing, which would be useful to authorities, policymakers and regulators who define requirements, technologies, and laws. The limitations of this paper are that it has not considered studies with fewer than 50 citations, and the findings may change if one includes all the studies irrespective of the number of citations. Moreover, the paper may ignore a few recent and important studies.