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Turkish currency crunch: Examining behavior across investor types

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  • Onuk, Cagri Berk
  • Fodor, Andrew

Abstract

In 2018 a currency crunch occurred in Turkey, accompanied by varied and differential trading amongst investors. We classify investors as foreign or local investors as well as individual or institutional and examine trading behavior and associated returns leading up to, during and after the crunch. We show foreign institutional investor net buying is positively related to future returns over the period while net buying of all other investor groups is negatively correlated with foreign institutional net buying. Further, foreign institutions performed best in timing the exchange rate market, leading to magnified returns. Our results suggest foreign institutions hold informational advantages even outside their home countries.

Suggested Citation

  • Onuk, Cagri Berk & Fodor, Andrew, 2023. "Turkish currency crunch: Examining behavior across investor types," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:intfin:v:85:y:2023:i:c:s1042443123000288
    DOI: 10.1016/j.intfin.2023.101760
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    References listed on IDEAS

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    More about this item

    Keywords

    Currency crunch; Foreign investors; Institutional investors; Informational asymmetries;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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