Stress test for industrial companies

Although stress testing in industrial companies is a new concept introduced to the literature with this study, it is currently applied compulsorily in banks within the framework of Basel III criteria. Stress test analysis is of great importance in order to anticipate problems arising from macro and micro risks, to take necessary precautions, and to survive some inevitable and unavoidable shocks without damage or with the least possible damage. However, in the economic literature, stress tests are only applied in the banking sector. In this study, we aim to develop a stress testing methodology that can also be applied to industrial enterprises. The simulation method provides industrial companies with information on what kind of situations they may face in the case of a macro and/or micro shock that may be experienced. Moreover, these findings can be reached in real market conditions without any extraordinary circumstances. The proposed stress test method based on liquidity in industrial companies has been tested on textile sector companies traded in Borsa Istanbul. In addition to introducing the first stress test methodology that can be practically applied for industrial enterprises, the study reveals the vulnerability of companies operating in the textile sector to macro and micro shocks that may be experienced in the market.