The Effects of Currency Futures Trading on Turkish Currency Market

In this article, the impact of the introduction of currency futures trading on the volatility of the underlying currency market for Turkey is studied. Analyzing the data, following results are obtained. First, the results suggest that the introduction of futures trading has decreased the volatility of Turkish currency market. Second, the results show that futures trading increases the speed at which information is impounded into spot market prices. Third, the asymmetric responses of volatility to the arrival of news have increased after the introduction of futures trading.Currency Futures Trading, Turkish Derivatives Exchange, GARCH

Firm Leverage and the Financial Crisis

The firm growth dynamics is an important topic since the growth performance of firms is the main source of the economic growth in countries. Generally, crises produce a sharp decline in firms’ growth and this leads to a decline in both the level of employment and the income of households. This paper focuses on the role of firm leverage on the growth performance of the firm during the global financial crisis. We investigate whether the firms that experienced a large leverage increase before the global financial crisis has worse growth performance of 2007 to 2009 than the firms that didn’t experience this rise. The findings suggest that the poorer sales growth performance of the firm was related to the firm leverage increase before the global financial crisis. The evidence shows that the correlation between leverage growth and the poorer sales growth performance is robust to firm-level control variables, such as size, age, fixed assets, liquid assets, inventories, profitability, export share and industry-specific factor

The Possible Effects of Transatlantic Trade and Investment Partnership (TTIP) on Turkish Economy

Due to the World Trade Organization’s (WTO) deadlocked multilateral trade negotiations, many countries have started to establish Free Trade Agreements (FTA). In this context, the European Union (EU) and the United States (US) have decided to establish bilateral Transatlantic Trade and Investment Partnership (TTIP). This note focuses on the impacts of this partnership on Turkish economy. To the best of our knowledge, we are the first to analytically analyze the economic impacts of the TTIP on Turkey by differentiating according to Turkey’s inclusion in and exclusion from the TTIP. By using Global Trade Analysis Project (GTAP) database and a general equilibrium model, the effects of various scenarios on GDP is studied within the framework of four-regional-consolidation, the EU, the U.S., Turkey and rest of the world. Obtained results show that Turkey could be in a gain of 35 billion USD if Turkey is included in TTIP compared to if she is excluded from the TTIP. Moreover, Turkey’s inclusion in TTIP is not only in favor of Turkey but also in favor of the EU and the USA in terms of higher GDP growth rates

The Possible Effects of Transatlantic Trade and Investment Partnership and Trans-Pacific Partnership on Chinese Economy

The failure to advance the multilateral trade negotiations of the World Trade Organization (WTO) was a disruption for the international trading system. Alternatively, many countries have commenced to establish bilateral and regional Free Trade Agreements (FTA). Among those agreements the Transatlantic Trade and Investment Partnership (TTIP) and Trans-Pacific Partnership (TPP) are agreements with members from across the Atlantic and the Pacific respectively. This note focuses on the impacts of these agreements on Chinese economy under three scenarios. The effects of various scenarios on Chinese GDP and export are studied by using the Global Trade Analysis Project (GTAP) database and a general equilibrium model. To the best of our knowledge, we are the first to analytically analyze the economic impacts of the TTIP on Chinese economy. In all of the scenarios the TTIP is realized and China never becomes a member of it. In the first scenario the TPP is not realized. In the second scenario the TPP is realized and China is excluded from it. In the last scenario the TPP is realized and China is included in the initiative. The results suggest that when only TTIP is realized, Chinese economic variables are negatively affected. When both TTIP and TPP are realized and China is excluded, the combined damage in Chinese economy is higher than the damage of TTIP alone. On the other hand, inclusion of China in the TPP affects its economic variables positively despite the negative effects of the TTIP. In other words, positive impacts of participation of China in the TPP compensate for the negative impacts of the TTIP

The Possible Effects of Trans-Pacific Partnership on Turkish Economy

Due to the World Trade Organization’s (WTO) deadlocked multilateral trade negotiations, many countries have started to establish Free Trade Agreements (FTA). In this context, twelve countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (US) and Vietnam have decided to establish Trans-Pacific Partnership (TPP). This study focuses on the impacts of this partnership on Turkish economy. By using Global Trade Analysis Project (GTAP) database and a general equilibrium model, the effects of various scenarios on GDP and exports are studied. Obtained results show that Turkey could be in a loss up to 1% of GDP if present 12 countries establish the TPP. Otherwise, potential countries’ inclusions in TPP could cause higher losses – up to 2.4% of GDP- for Turkey

Credit Growth Volatility

The Central Bank of the Republic of Turkey has started to implement its new policy mix since late 2010. In this new approach expectations, credit growth and reel exchange rate are monitored closely as key indicators for financial stability on top of price stability. The effect of this new monetary policy framework on the volatility of credit growth is the main theme of this note. To the best of our knowledge, we are the first to analyze the impact of new policy mix on the credit growth volatility. It is shown that there is a significant decrease in the volatility of credit growth after the introduction of new policy framework at late 2010. Therefore, it can be said that this new monetary policy framework contributes to financial stability in Turkey by lessening the credit growth volatility

GDP Growth and Credit Data

It is a well-known fact that there is a strong relationship between bank credits and economic activity. Thus, it is a reasonable question whether credit data can be used in nowcasting GDP growth. It is important for policymakers to make on-time decisions with the most available data and nowcasting is an important tool when policies in question are needed to be made based on current figures. Most macroeconomic variables are made available to public after a considerable delay; however, banking credit data may be very valuable for the early estimate of current GDP as it is available only with a few days delay. In this paper, we aim to investigate the feasibility of using credit data in explaining the variability in Turkish GDP growth and as well as nowcasting it. For this purpose, we use credit impulse and new borrowing, two measures of credit flows. We show that credit impulse and new borrowing are significant in explaining the pattern of the Turkish GDP growth and they have significant contribution to nowcasting it

Determinants of Capital Structure: Evidence from a Major Emerging Market Economy

This paper uses a new and comprehensive dataset to investigate the capital structure of non-financial firms in a major emerging market economy, Turkey. We study both statistical and economic significance of four types of leverage factors: Firm-specific, tax-related, industry-specific, and macroeconomic. Results suggest that tax-related factors and asset tangibility are the most economically significant factors for short-term and long-term debt ratios, respectively. Results also suggest that inflation is an important determinant of leverage and the most economically significant macroeconomic factor. Moreover, we provide evidence that firms adjust their leverage towards the industry median, that firms match the maturity of their assets and liabilities, and that inflows of foreign capital have a marked influence on firms’ capital structures, particularly on large and mature non-manufacturing firms. We also conduct a systematic analysis of capital structure differences between manufacturing and non-manufacturing, small and large, and young and mature firms. Overall, the trade-off theory appears to be more successful than the pecking order theory in accounting for the capital structure of Turkish non-financial firms

Determinants of Capital Structure: Evidence from a Major Emerging Market Economy

This paper uses a new and comprehensive dataset to investigate the capital structure of non-financial firms in a major emerging market economy, Turkey. We study both statistical and economic significance of four types of leverage factors: Firm-specific, tax-related, industry-specific, and macroeconomic. Results suggest that tax-related factors and asset tangibility are the most economically significant factors for short-term and long-term debt ratios, respectively. Results also suggest that inflation is an important determinant of leverage and the most economically significant macroeconomic factor. Moreover, we provide evidence that firms adjust their leverage towards the industry median, that firms match the maturity of their assets and liabilities, and that inflows of foreign capital have a marked influence on firms’ capital structures, particularly on large and mature non-manufacturing firms. We also conduct a systematic analysis of capital structure differences between manufacturing and non-manufacturing, small and large, and young and mature firms. Overall, the trade-off theory appears to be more successful than the pecking order theory in accounting for the capital structure of Turkish non-financial firms