Do political risks matter in the financial markets?: evidence from Turkey

Merve Tuncay ()
Additional contact information
Merve Tuncay: Cumhuriyet University

Eurasian Business Review, 2018, vol. 8, issue 2, No 5, 209-227

Abstract: Abstract Understanding political risk and its effect on financial markets is an important issue for both policymakers and investors, as capital flow tends to be confidence-based across financial markets. Using both dollar-based monthly returns from the BIST100 index and the total political risk rating, including four political risk subcomponents, for the period of January 1997 to June 2013, this paper investigates the long-term relationship between financial markets and political risk in Turkey applying cointegration tests and causality tests to data obtained from Borsa Istanbul (BIST) and the International Country Risk Guide (ICRG). Our findings indicate that, a long-term relationship of equilibrium exists between financial markets and political risks in Turkey, revealing the importance of considering political conditions when making decisions regarding financial markets in Turkey. The research is expected to contribute to the literature, especially in the context of trading in emerging financial markets and how political acts reflect financial markets, as shown by the evidence from Turkey.

Keywords: Financial markets; Cointegration test; Causality test; Borsa Istanbul; Political risks (search for similar items in EconPapers)
JEL-codes: C32 E44 G10 P48 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s40821-017-0077-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:eurasi:v:8:y:2018:i:2:d:10.1007_s40821-017-0077-5

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40821

DOI: 10.1007/s40821-017-0077-5

Access Statistics for this article

Eurasian Business Review is currently edited by Marco Vivarelli

More articles in Eurasian Business Review from Springer, Eurasia Business and Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().