Work

Financial conditions and economic activity: The case of Türkiye

Year: 2024

Type: article

Abstract: This study conducts a comprehensive analysis of the effects of changes in financial conditions on the economy of Türkiye, for which financial conditions indices were constructed. To examine possible changes in the relationship between financial conditions and the real economy due to the unique nature of the COVID-19 pandemic, the impacts of financial conditions on the economy were analyzed separately for 2005–2019 and 2005–2023. The impulse response analyses revealed that changes in financial conditions had significant effects on macroeconomic aggregates from 2005 to 2019. However, these effects became insignificant when the analysis was extended to 2023. This change is interpreted with caution. Deepening the analysis with financial conditions indices obtained from different data groups revealed that risk perception-based variables played a relatively important role until 2019.

Source: Borsa Istanbul Review

DOI: 10.1016/j.bir.2024.12.016

Authors: Özgür Ergül, Mahmut Günay

Institution: Central Bank of the Republic of Turkey

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $1,500