Confidence–Stock Yield Relation in Turkish Economy

Abstract

Ensuring regular cash flow to equity markets means the continuation of the functioning of these markets. In order to realize this situation, economic decision makers need to have positive outlook toward overall economy. The reciprocity of positive outlook is the confidence at the economy. The study aims to investigate how Consumer Confidence and Real Sector Confidence indices lead to the return of the stock market in Turkey. The relationship between the specified variables were investigated with time series analysis using the monthly data of the period of 2012(1)- 2017(8). In practice, the stability levels of variables were determined by first unit root test. In econometric analysis, ARDL cointegration and Toda-Yamamoto causality tests were used because of the variables were at different stability levels. As a result of ARDL cointegration analysis, a significant relationship between variables has been found. It is also found that there is a causality relationship exist from BIST 100 return index toward real sector confidence index by using Toda-Yamamoto causality analysis. As a result, Bist 100 return index in Turkey, affect the real sector confidence index.