Macroeconomic Instability and Terrorism Nexus: Empirical Evidence in Case of Pakistan

The current study is an attempt to analyze the association between macroeconomic instability and terrorism in Pakistan over the period of 1970 to 2020. Six important variables are taken as a proxy to measure macroeconomic instability which includes external debt, budget deficit, trade deficit, real effective exchange rate (REER), inflation and unemployment. Results indicate that there exists a long run cointegration relationship between the indictors of macroeconomic instability and terrorism. FMOLS is employed to obtain the estimates and it reveals that budget deficit and external debt is negatively associated with terrorism. It indicates that government expenditures on different project such as infrastructure create economic opportunities, therefore, reduces terrorism. Furthermore, welfare programmes also improve the performance of socioeconomic variables that translates into harmonized environment which lessens violence. The variable of trade deficit, inflation and unemployment has positive impact on terrorism while REER is insignificant. In context of trade deficit, higher imports results in job loss of domestic industries, hence, it hits the vulnerable groups. Therefore, the opportunity cost of life of these groups reduces and it increases the probability to become a part of terrorist activities. Inflation also pushes the vulnerable groups in poverty by reduces the purchasing power and unemployed individuals are also easy target to get involve themselves in acts of aggression. This study also constructs the macroeconomic instability index including the six variables through principal component analysis (PCA). Results of this model show that macroeconomic instability index and GDP has positive effect on terrorism. In case of GDP, the plausible reason could be uneven income distribution that increases terrorist activities. For the policy implications, government need to divert the resources from non-productive to productive uses through the investment in such projects which has direct and indirect impact on the welfare. In this way deprived group will enjoy economic perks and engage themselves in productive activities rather than becoming a helping hand in terrorism.

Financial Sophistication, Personality and Stock Market Participation: Theory and Evidence

This study intended to investigate the behavior of human as an investor by capturing and envisioning the reasons for stock market participation. It examines the impact of investor‟s personality and emotional quotient on stock market participation. This study add to existing body of literature by investigating the moderating impact of financial sophistication, trading experience and gender between investor‟s personality emotional quotient and stock market participation. The study was cross sectional with time lag data collection, used multiple regressions and archival research methodology. Andrew Hayes Process was operationalize to measure the moderating relationships among the variables. The use of regression and Andrew Hayes Process helped to empirically test and validate the research hypotheses. The study finds that there was positive impact of extroversion and openness to experience on stock market participation. On the basis of literature it was hypothesized that there was negative relationship between conscientiousness, agreeableness, neuroticism and stock market participation. The statistical results also validate and extended the support for the proposed hypothesis. It was also hypothesized that there is positive impact of motivation and self-awareness on stock market participation. Statistical results demonstrated positive impact of motivation on stock market 3 participation. While results for self-awareness were counter to the expectation and showed negative association with stock market participation. The study concludes that financial literacy, trading experience and gender can modify the relationship between some basic personality traits and stock market participation. It showed that, on the one hand, behavior finance is not completely predetermined by one‟s DNA, on the other, it also points out exactly what other traits that are not so influenced by financial literacy, trading experience and gender. Perhaps this implies that these traits are more predetermined by one‟s innate characteristics. The current study has used quantitative data for analysis, using qualitative interviews to gather more improved information would be an addition in the literature with influence of family resource management theory. The study has implications for policy makers and government at micro and macro level. The present study provides valuable insights and protection to vulnerable groups by exploring the financial behavior of individuals in case of financial planning and investments. Study provides interdisciplinary contribution by extending the usefulness of Big Five taxonomy and establishing personality as a viable approach with respect to stock market participation. The results of the study are in line with the Western settings and can be well generalized to the Pakistani settings. Furthermore the findings of this research provide firm grounds for future research. Keywords: financial sophistication, personality, emotional quotient, trading experience, stock market participation.