Monetary Policy and Turkey’s Stock Market: A New Insight Form Combined Cointegration Test

Main Article Content

Ahmed Samour
Aliya Zhakanova Isiksal
Turgut Türsoy


The main purpose of this research is to test the effect of monetary policy, which is determined by exchange rates, interest rates, money supply, and consumer prices on Turkey’s stock market during the period of 1993Q4-2016Q4, which includes two economic crises. To check the cointegration between the variables, the research uses the Pesaran’s ARDL Bounds and Gregory Hansen cointegration tests. Furthermore, a new technique of Bayer and Hanck [1] combined cointegration approach is applied to support the result of the Pesaran’s ARDL test. To estimate the coefficient in the long run, the paper employs the ARDL, DOLS, FMOLS, and CCR estimation models. The results from the estimation models show that there is a significant impact of monetary policy on stock prices in the short and long run. The results indicate that there is a positive and statistically significant relationship between consumer prices, money supply, and stock prices. Furthermore, the results suggest that currency appreciation leads to increases in stock prices. Also, the results indicate that there is a negative and statistically significant relationship between the interest rates and stock prices. Finally, the results show that the 2001 and 2008 crises had an inverse impact on stock prices in Turkey. It is suggested that policymakers in Turkey should endeavor to promote credit accessibility and investment in the markets by reducing the interest rate, and inflation rate fluctuations to make market stability.

Bayer and hanck, ARDL, monetary policy, financial crisis, Turkey.

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How to Cite
Samour, A., Isiksal, A. Z., & Türsoy, T. (2020). Monetary Policy and Turkey’s Stock Market: A New Insight Form Combined Cointegration Test. Asian Journal of Economics, Finance and Management, 2(4), 69-77. Retrieved from
Original Research Article


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