The effects of the monetary policy decision dated July 25 2019 on the returns of banks and intermediary institutions

In this study, the effects of the decision of the Monetary Policy Committee of the Central Bank of the Republic of Turkey (CBRT) to reduce the one-week repo interest rate (policy rate) from 24 percent to 19.75 percent on the returns of banks and intermediary institutions included in the Borsa Istanbul Financial Index (XUMAL) have been examined using event study method. For this purpose, the closing prices of banks and intermediary institutions from 15.01.2019 to 28.08.2019 were used as data, and the changes resulting from the interest rate cut decision were investigated. In the study, the announcement day was considered the event day. We created event windows for "-21, +21", "-14, +14", "-7, +7" intervals, and abnormal returns (AR), average abnormal returns (AAR), and cumulative average abnormal returns (CAAR) were calculated and interpreted for the shares. According to the analysis results, we observed that bank stocks were negatively affected by the interest rate cut decision, while intermediary institutions were positively affected.