Turkish currency crunch: Examining behavior across investor types

Cagri Berk Onuk and Andrew Fodor

Journal of International Financial Markets, Institutions and Money, 2023, vol. 85, issue C

Abstract: In 2018 a currency crunch occurred in Turkey, accompanied by varied and differential trading amongst investors. We classify investors as foreign or local investors as well as individual or institutional and examine trading behavior and associated returns leading up to, during and after the crunch. We show foreign institutional investor net buying is positively related to future returns over the period while net buying of all other investor groups is negatively correlated with foreign institutional net buying. Further, foreign institutions performed best in timing the exchange rate market, leading to magnified returns. Our results suggest foreign institutions hold informational advantages even outside their home countries.

Keywords: Currency crunch; Foreign investors; Institutional investors; Informational asymmetries (search for similar items in EconPapers)
JEL-codes: F31 G11 G15 G23 G38 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:85:y:2023:i:c:s1042443123000288

DOI: 10.1016/j.intfin.2023.101760

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