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This paper investigates the variation in nonperforming loans over the economic cycle and the effect of past returns based on a nonparametric quantile analysis of the largest Islamic banks in the United Kingdom and Turkey from 2010 to 2019. The findings show a weak variation in nonperforming loans that increases with an increasing return on assets and a decreasing return on equity and decreases in an inverse scenario. As a result, the credit risk of Islamic banks is countercyclical. We suggest that the inverse relationships evidence the existence of trade-offs within bank returns and credit risk. Thus, banks' past profitability and risk mitigation are determinants of asset quality. These findings provide support for risk-taking and risk-sharing principles in which flight-to-safety mirrors the calibration of risk factors in a disruptive economy. Our estimates indicate that nonparametric quantile regression captures considerably more variation in a risk-return analysis. [ABSTRACT FROM AUTHOR]

This paper investigates how various macroeconomic policy shocks in Turkey affect unemployment and provides evidence on the differential responses of unemployment in selected sectors of economic activity. Our paper extends previous work in two respects. First, we consider not only the response of total unemployment, but also the response of unemployment by selected sectors of economic activity. Second, we consider not only the effect of monetary policy shocks, but also the effects of several other macroeconomic shocks. The results indicate that unemployment in different sectors of economic activity responds differently to various macroeconomic policy shocks. [ABSTRACT FROM AUTHOR]

While there are numerous empirical studies on business cycles for developed economies, there are very few analyses regarding developing countries. The purpose of this paper is to document the comovement among sectoral outputs in Turkey, a developing country, and provide evidence about the importance of real factors to explain fluctuations. Specifically, we ask whether business activity in Turkey is generated by a few forces and whether there are differences in the shape, duration, and amplitude of cycles of individual sectors. Furthermore, we examine the relative importance of permanent and transitory innovations. Using sectoral data for fifty years, and employing cointegration and cofeature analysis, we find evidence in favor of strong comovement of sectors in the Turkish economy. Nonetheless, the evidence that almost all variation in total innovations in all sectors could be attributable to permanent innovations implies that the sources of the fluctuations could be real factors. The findings about the procyclicality and amplitudes of transitory components, as well as about the relative importance of permanent innovations, is unlike the evidence reported for advanced economies in earlier research. [ABSTRACT FROM AUTHOR]

The strong recovery in the Turkish banking sector after the financial crisis that hit the country in 2001 sets a good example for countries experiencing similar difficulties. In this paper, we will first briefly discuss the financial and regulatory measures taken after the Turkish banking crisis. In addition, the current state of the Turkish banking sector will be discussed in a relatively detailed way. Particularly, some of the measures on bank capitalization and other reforms will be presented. Despite all these positive changes in the system, the Turkish financial sector has now reached a stage where further growth requires more structural macro reforms. We will conclude by summarizing the future risks and opportunities of the Turkish financial system. [ABSTRACT FROM AUTHOR]

This paper investigates the hypothesis that there is a causal relation between speculative pressure and real exchange rate overvaluation, banking-sector fragility, and the level of international reserves in Turkey. An autoregressive distributed lag (ARDL) bounds-testing procedure and Granger causality within vector error-correction models (VECM) are applied to the period after the liberalization of capital flows (August 1989-August 2006). The results of the ARDL bounds test support the theory that exchange market pressure is in a long-run equilibrium relation with the three hypothesized variables over the sample period. On the other hand, the results of the short-run and long-run Granger causality tests indicate the existence of Granger causality running from the three variables to exchange market pressure. The findings further suggest that a feedback relation exists between banking-sector fragility and exchange market pressure. [ABSTRACT FROM AUTHOR]

This paper examines the cyclical interactions between the remittances of Turkish workers in Germany and output in both Turkey and Germany. Our analysis introduces a new data set covering 1962 to 2004, never used before in the research literature and considered to be a more reliable source than the data sets used in other studies. By dividing the original sample into recruitment, family reunification, and naturalization periods, we show that the duration of migrants' stay in the host country affects the direction and strength of the relation between remittances and the host and home countries' business cycles. [ABSTRACT FROM AUTHOR]

The aim of this paper is to construct a composite leading indicator (CLI) for Turkish economic activity that would crucially provide earlier signals of turning points between economic expansions and slowdowns. First, for this analysis, the index of nidus- trial production is selected as an indicator for economic activity. Second, a group of vari- bales that perform well both in forecasting and in tracking cyclical developments of economic activity is selectedfmm a broad set of economic indicators related to industrial pmduction. While constructing the CLI, a growth cycle app mach is used The resulting cyclical pat- terns of the series are obtained by eliminating seasonal, irregular and trend components via TRAMO/SEATS programs and Hodrick-Prescott filter The selection of the component series is based on theoretical economic significance and their leading performance at cy- clical turning points. From the selected series, dWerent CLIs are constructed, and that with the best performance is chosen as the CLI for Turkish economic activity. [ABSTRACT FROM AUTHOR]

The importance of the common features in macroeconomics particularly in real business cycle studies is by now widely understood and manifests itself in numerous studies. On the other hand, there has been very few works related to developing countries. This paper attempts to fill this gap, at least to some extent, by using quarterly observations on major macroeconomic aggregates, namely consumption, investment and output in Turkey to investigate both the stylized facts and the common features. The methodology is based on the multivariate structural time series which allows explicit representation and estimation of the components of economic time series such as trend, slope, cycle and irregular. Empirical results indicate that these aggregates do not share a common cycle; however, a common slope with smooth trend restriction is not rejected indicating that the series are linked with a cointegration of type CI (2,2). The findings imply that in spite of the existence of a long-run relation among them, countercyclical policies targeting any of these variables may not be successfully transmitted to the others in the short run. [ABSTRACT FROM AUTHOR]

The research aims to provide new empirical evidence by testing the impact of the external shocks namely: oil prices and the U.S interest rate on Turkey's real estate market by using three techniques of co-integration tests namely: the newly developed bootstrap autoregressive distributed lag (ARDL) testing approach as proposed by (McNown et al. 2018), the new approach involving the Bayer-Hanck (2013) combined co-integration test, Hatemi-J (2008) co-integration testing approach. The ARDL model is utilized to explore the relationship between the variables. The findings show that the oil prices have a positive impact on Turkey's real estate market, the results confirm that there is a significant impact of oil prices on Turkey's real estate market through the domestic interest rate. Furthermore, the results demonstrated that there is a significant spillover influence of the U.S. interest rates on Turkey's real estate market through oil prices and domestic interest rates. This study suggests that the following factors led to increasing the sensitivity and volatility of the Turkish real estate market to oil prices and the U.S. interest rate fluctuations: the presence of economic interdependence between the USA and Turkey, and the majority of the external debts and the reserve currency in Turkey are composed in the USD, and Turkey's oil imports hit record high in last years. Finally, this article suggests that policymakers in Turkey should pay close attention to the effects of external shocks namely the oil prices and U.S. interest rates on Turkish markets to maintain economic and financial stability. [ABSTRACT FROM AUTHOR]

Investigates the existence of political business cycles in Turkey for the 1986-1997 period. Inflation problems since the 1970s; Political surfing and manipulative hypotheses about the behavior of governments in a parliamentary system.

Investigates the production cycles in the European Union countries (EU) and Turkey in context of the adjustment process for Turkey's membership in EU. Overview of developments in relationship between the European Union countries and Turkey; Mutual financial responsibilities of the EU and Turkey in case of full membership; Econometric analysis of the relationship between production indexes of Turkey and EU.

Uncertainty is one of the most important issues for economic actors. Uncertainty about tax, expenditure and debt policy has an impact on the economy. The central question in this study asks how fiscal policy uncertainty affects the Turkish economy. First, we quantify Turkey’s fiscal policy uncertainty index based on volatility measurements between 1998Q1 and 2020Q4. This index represents major fiscal, economic and political incidents in Turkey. Next, we analyse the effects of fiscal policy uncertainty on the Turkish economy using a VAR model. Our study finds that fiscal policy uncertainty shocks have detrimental and long-lasting effects on the Turkish economy. The results indicated that a positive standard deviation shock in fiscal policy uncertainty decreases the confidence, output and consumption. The findings of thisstudy reveal critical fiscal policy implications for decision-makers. These findings imply that reducing Turkey’s fiscal policy uncertainty is a critical policy priority for the business cycle fluctuations. [ABSTRACT FROM AUTHOR]