Transmission mechanisms of financial stress into economic activity in Turkey

Polat, Onur; Özkan, İbrahim

doi:10.1016/j.jpolmod.2019.02.010

Cited by 26 publications

(8 citation statements)

References 29 publications

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“…Figure 3 depicts the Composite Governance Index (CGI) for Turkey in the 2002-2017 period. (Polat and Ozkan, 2019). As a consequence, the dynamics of the CGI are robust and consistent with political as well as economic developments observed in the post-2001 period.…”

Section: Composite Governance Indicatorsupporting

confidence: 70%

“…As presented in Table 1, the first two components explain almost 90% of the variance in the PCA. In the next step, we construct the composite government index using weighted average of the first 2 PCs according to following formula: accordingly (Polat and Ozkan, 2019). As a consequence, the dynamics of the CGI are robust and consistent with political as well as economic developments observed in the post-2001 period.…”

Section: Composite Governance Indicatormentioning

confidence: 92%

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Measuring Quality of Governance in Turkey: A Composite Governance Index

Polat

2020

Fiscaoeconomia

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In this study, we analyze the quality of governance in Turkey by using worldwide governance indicators (WGIs), namely, voice and accountability (VA), political stability and absence of violence (PV), government effectiveness (GE), regulatory quality (RQ), rule of law (RL), and control of corruption (CC) which aggregate 6 dimensions of governance. In that regard, we employ principal component analysis (PCA) to construct a composite governance index (CGI) for Turkey over the 2002-2017 period. We find that the CGI creates proper signals to both economic and political disequlibriums observed in the post-2001 financial crisis era. Our findings underline an effective regulatory framework for monitoring the quality of governance and accordingly suggests the CGI as a policy tool.

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Section: Composite Governance Indicatorsupporting

confidence: 70%

Section: Composite Governance Indicatormentioning

confidence: 92%

Measuring Quality of Governance in Turkey: A Composite Governance Index

Polat

2020

Fiscaoeconomia

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“…Several studies suggest that episodes of financial stress lead to economic downturns and considerable losses in terms of GDP (Cecchetti et al, 2009;Cardarelli et al, 2011;Polat & Ozkan, 2019;Ferrer et al, 2018). At the same time, cross-country work by Knack & Keefer (1997) reveals a statistically significant and positive effect of trust on growth, an association that was confirmed in follow up studies (Zak & Knack, 2001;Beugelsdijk et al, 2004;Bjørnskov, 2012;Agénor & Dinh, 2015).…”

mentioning

confidence: 82%

“…2 In general, these studies capture financial stress with indices that cover various market segments, and examine either a group of countries (e.g. Cardarelli et al, 2011;Cevik et al, 2016), or specific countries like France (Aboura & van Roye, 2017), the USA (Chau & Deesomsak, 2014;Hubrich & Tetlow, 2015;Ferrer et al, 2018), and Turkey (Polat & Ozkan, 2019).…”

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confidence: 99%

Financial stress and economic growth: The moderating role of trust

Makrychoriti

Pasiouras

Tasiou

2021

Kyklos

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The literature suggests that trust can influence the behavior of economic agents and improve access to financing for both households and corporations. Subsequently, this might have implications for the consumption of households and the investments of corporations. Therefore, trust could mitigate the negative impact of financial stress on economic growth. To test this hypothesis, we use a sample of EU countries over the period 2002-2020 and examine the interaction of trust with financial stress in shaping GDP growth. The interaction term enters the estimations with a positive and statistically significant coefficient, and it therefore mitigates the negative impact of financial stress on economic growth. Furthermore, by disaggregating the GDP into its four main components, we find that the moderating effect of trust flows through the two main components of GDP mentioned above, namely households' consumption and firms' investments. Additionally, we observe that the interaction effect becomes weaker in countries with a higher economic freedom and is strengthened in centre and left-wing governments compared to right-wing economically oriented ones.

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“…Drawing a financial stress index (FSI) became imperative due to repeated incidences of financial crises. In fact, financial crises are associated with a protracted recovery from other forms of recessions [1,2].…”

Section: Introductionmentioning

confidence: 99%

Investigating the Relationship Between Financial Stress Index and MENA Stock Markets Performance

Soltani¹,

Abbes²,

Aloulou³

2021

IJFBR

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This article assesses the effect of financial stress caused by the great depression, 2008-2009 , Oil crises of 2014-2015 accompanied by the sharp fall in the oil prices and the Arab Spring on the co-movements and volatility spillovers of aggregated Financial Stress Indices for eleven MENA countries. It is reveals that the extreme values of the FSIs are generally connected with well-known past financial stress episodes. We also found, for MENA Ex GCC countries, a weak interconnection between these countries while the GCC countries are more connected. Using a Vector auto-regression (VAR) estimation framework, we showed that the performance of the stock indices depends positively on its past and also, the stress index positively depends on his past delayed either by one or two periods. While, the study of impulse response functions shows that a positive shock on the financial stress index translates into a negative effect on stock market performance during the first year. This effect then disappears in slow motion before finding its long-term level.

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Transmission mechanisms of financial stress into economic activity in Turkey

Cited by 26 publications

References 29 publications

Measuring Quality of Governance in Turkey: A Composite Governance Index

Measuring Quality of Governance in Turkey: A Composite Governance Index

Financial stress and economic growth: The moderating role of trust

Investigating the Relationship Between Financial Stress Index and MENA Stock Markets Performance

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