Turkey: From a thriving economic past towards a rugged future? - An empirical analysis on the Turkish financial markets |
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| Institution: | 1. Department of Accounting, Economics and Finance, American College of Greece (Deree), Gravias Street, 6, 15342, Athens, Greece;2. Department of International and European Studies, University of Macedonia, Egnatia 156, 54636, Thessaloniki, Greece;1. Universidade Jean Piaget de Guinea-Bissau, Guinea-Bissau;2. Laval University, 1245 Rue de la Colline, L''Ancienne-Lorette, QC G2E 3S1, Canada;1. Monetary and Banking Research Institute, Tehran, Iran;2. Graduate School of Management and Economics, Sharif University of Technology, Tehran, Iran;3. Department of Finance, Orfalea College of Business, California Polytechnic State University, San Luis Obispo, CA 93407, USA;1. Department of Industrial and Management Systems Engineering, Kyung Hee University, Yongin-si, Gyeonggi-do, Republic of Korea;2. Department of Big Data Analytics, Graduate School, Kyung Hee University, Yongin-si, Gyeonggi-do, Republic of Korea;3. Investment Policy Division, National Pension Research Institute, Republic of Korea;4. Carey Business School, Johns Hopkins University, United States of America;1. School of Economics and Management, Huzhou College, 1st Xueshi Road, Wuxing District, Huzhou, Zhejiang Province, PR China;2. International Business School Suzhou, Xi''an Jiaotong-Liverpool University, PR China |
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| Abstract: | Turkey had been economically thriving after the end of the economic crisis of 2001. Nonetheless, the recent depreciation of the Turkish lira proved the eventual fragility of the Turkish economy. This research attempts to examine whether the financial markets behavior had forecast this economic collapse. The results support that negative dynamics take place between the nominal exchange rate of Turkish lira and the Turkish stock market index in the long-run. Simultaneously, it is estimated that the uncovered equity parity had been in effect during the last decade but its impact highly deteriorated after March 2018. The Turkish policy makers will sooner or later have to either abandon the low interest rate policy or apply for financial assistance from the IMF. |
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