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The Effect of Economic Policy and Monetary Policy Uncertainties on Investor Behavior: Example of Newly Industrialized Countries

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  • Turgay Münyas

    (Okan University)

  • Gülden Kadooğlu Aydın

    (Harran University)

Abstract

Uncertainties negatively affects many macroeconomic factors by affecting the decisions of financial market participants. These uncertainties trigger deteriorations in macroeconomic factors, making the decision-making processes of economic policy makers difficult. This situation leaves financial market participants faced with two main types of uncertainty: economic policy uncertainty and monetary policy uncertainty. These uncertainties create concern about the behavior of investors investing in capital markets and cause fluctuations in financial markets. The aim of the research is to examine the effect of economic policy uncertainty and monetary policy uncertainty on the behavior of stock market investors. The study was analyzed with westerlund (2008) panel cointegration test using data for the period between march 2009 and march 2023. In the first stage of the analysis, the negative effects of monetary policy uncertainty on investor behavior were identified. In addition, within the scope of the study, the economic policy uncertainty index was also examined and the consistent effects of uncertainties were questioned. The results showed that economic policy and monetary policy uncertainties negatively affect investor behavior. In addition, it has been determined that economic policy uncertainty has more negative effects than monetary policy uncertainty.

Suggested Citation

  • Turgay Münyas & Gülden Kadooğlu Aydın, 2025. "The Effect of Economic Policy and Monetary Policy Uncertainties on Investor Behavior: Example of Newly Industrialized Countries," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 40(123), pages 64-91, April.
    • Handle: RePEc:acc:malfin:v:40:y:2025:i:123:p:64-91
    DOI: https://doi.org/10.33203/mfy.1396689
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    More about this item

    Keywords

    Monetary Policy Uncertainty; Economic Policy Uncertainty; Investor Behavior.; Panel Cointegration Test;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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