Causal factors of terrorist attacks on countries, and corresponding spill-overs between them

This paper quantifies spill-overs of terrorist attacks between countries through a variety of factors. One of these factors is Hawala, a vast informal funds transfer system providing speedy, untraceable funding and money laundering for global terrorism. This issue is quite relevant given the rise of terrorist organizations such as the Islamic State, with vast and difficult to track cash earnings. We also quantify how specific changes in one country may affect the extent of terrorism in that country and how it spills over neighboring countries. Somewhat surprisingly, our results suggest that these terrorist spillover effects are positive in some cases, while in others, they are negative. •International terrorism spills over through untraceable funding and money laundering.•Quantifying terrorism spread through Hawala, a vast informal funds transfer system.•Hawala use by ordinary citizens hides terrorist transactions.•Use the fact that ordinary citizens lacking financial access use Hawala, to trace it.•Spillovers of terrorism are positive and negative when changes occur in given country.