Does terrorism affect savings? Evidence from Nigeria

The relationship between terrorism and savings is conceptually ambiguous.

Abstract

Terrorism can either lower savings by increasing perceived associated risks or result in more precautionary savings as a coping strategy. A scarce empirical literature fails to resolve this ambiguity.

Alberto addresses it by differentiating between formal and informal savings. Alberto argues 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, Alberto shows evidence that supports this hypothesis. Alberto adopts 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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RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business - Artwork 'Luwaytini' by Mark Cleaver, Palawa.

aboriginal flag
torres strait flag

Acknowledgement of country

RMIT University acknowledges the people of the Woi wurrung and Boon wurrung language groups of the eastern Kulin Nation on whose unceded lands we conduct the business of the University. RMIT University respectfully acknowledges their Ancestors and Elders, past and present. RMIT also acknowledges the Traditional Custodians and their Ancestors of the lands and waters across Australia where we conduct our business.