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Determinants of Foreign Portfolio Investments in Turkey

Author

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  • Abdulkadir Kaya
  • Turan Ondes

Abstract

Accelerating with financial globalization, foreign capital is increasingly becoming an important financing instrument as well as a source of financing for sovereign countries. Especially in the early 1990s, the rapid liberalization of national capital markets paved the path to the worldwide mobilization of capital factors. As an element of foreign capital, foreign portfolio investments provide debt-free sources of borrowing, facilitate the effective allocation of capital and expand local capital markets in developing countries. The purpose of this study is to identify the determinants of foreign portfolio investments in Turkey. In this study, using monthly data for the period of 1998:01–2010:12, a regression analyses was carried out. As a result of the study, the greatest contribution of variables on foreign investors’ buying and selling decisions are found to be the growth rate of ISE 100 index, the volume of foreign investors’ buying and selling transactions in prior periods and finally the Gross Domestic Product.

Suggested Citation

  • Abdulkadir Kaya & Turan Ondes, 2013. "Determinants of Foreign Portfolio Investments in Turkey," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 13(52), pages 17-37, April.
    • Handle: RePEc:bor:iserev:v:13:y:2013:i:52:p:17-37
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    More about this item

    Keywords

    Foreign Capital; Foreign Portfolio Investments; Macroeconomic Variables; Country Risks; ISE.;
    All these keywords.

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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