Reflection of the expectations to the turkey financial markets

The mobility of international capital which increased with the liberalization of financial markets has led to the increase of fragility in financial markets too. Particularly since the 1990s when the world became a single-centred, financial crisis (such as the Mexican crisis of 1994, the Asian crisis of 1997, the Russian crisis of 1998), have revealed the importance of the change in the expectations about the economy. In this sense, the determination of the relationship between economic confidence indexes which is a numerical expression of the expectations of economic units with the markets has become an important issue for both policy makers and researchers. The aim of this study is to examine the short- and long-term relationship between the consumer confidence index and financial markets and general economic indicators and the direction of this relationship simultaneously. Accordingly, the relationship between money market, capital market and the relationship between the variables determined for the general economic situation and the consumer confidence index which is released by Turkey Statistical Institute (TUIK) and the Central Bank of the Republic of Turkey (CBRT) have been evaluated by using the 2005:01-2019:04 terms monthly data. The results obtained from the empirical study using time series analysis are as follows: First, the long-term relationship between money market indicators and consumer confidence index was determined. In addition, it is determined that there is a one-way causality relationship from money market indicators to dollar consumer confidence index. In the other model in which the relationship between capital market indicators and consumer confidence index was investigated, no long-term relationship was found between the variables. However, while there is a one-way causality relationship from the stock market indicator index to the consumer confidence index; It is concluded that there is a causal relationship between the bond market indicator variable and consumer confidence index. Finally, it is determined that there is a long-term relationship between general economic indicators and consumer confidence index and it is determined that there is one-way causality relationship from inflation-related indicators to consumer confidence index. Keywords: Consumer Confidence Index, Financial Markets, Causality Analysis, Behavioural Finance