Competition,signaling and non-walking through the book: Effects on order choice

We investigate the effects of competition and signaling in a pure order driven market and examine the trading patterns of agents when walking through the book is not allowed. Our results suggest that the variables capturing the cost of a large market order are not informative for an impatient trader under this market mechanism. We also document that the competition effect is not present only at the top of the book but persistent beyond the best quotes. Moreover, it dominates the signaling effect for both a limit order and a market order trader. Finally, we show that institutional investors’ order submission strategies are characterized by only a few pieces of the limit order book information. This is consistent with informed traders placing orders based on their own private valuations rather than the state of the book.     

Currency substitution,policy rule and pass-through: evidence from Turkey

In this article we analyse empirically currency substitution and exchange rate pass-through in the Turkish Economy, where their ongoing presence could undermine the implementation of a successful monetary policy, especially in a flexible exchange rate regime. Even though a considerable time has passed after the implementation of a flexible exchange rate regime in Turkey, by using Vector Error Correction model for the period from 1987 to 2004, we find that the currency substitution and exchange rate pass-through still have importance in the Turkish Economy and the monetary policy stance has been considerably strong, possibly, as a response of ongoing presence of them. If this is the case, to avoid the undesired consequences of this strong monetary policy, Turkey should consider some policy measures to reduce the degree of pass-through and currency substitution.