An Inquiry on the Factors Contributing to the Economic Crises in Turkey

Kamuran Malatyali

Istanbul Stock Exchange Review, 2000, vol. 4, issue 15, 53-64

Abstract: The aim of this paper is to perform a crises analysis for Turkey based on the ISE index values. To this aim, a probit analysis is adopted. For yields lower than a threshold a “negative crisis” situation is stipulated while for yields higher than a threshold in the positive yield distribution area a “positive crisis” is defined considering bubbles in the securities market, as well, increasing the possibility of an economy-wide crisis as experienced in the latest Asian Crisis. Hence, two different sets of estimation results related to the two different crises conditions are obtained. The results of the two models show that capital flows and international choice of investment are the factors adding to the possibility of crisis condition in Turkey. In addition, inflation and real sector activities affect the possibility of crisis condition. Lastly, the level of interbank rates, a policy tool of the Central Bank, affect the possibility of a crisis condition in Turkey.

Date: 2000
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