Empirical analysis of the impact of risk tendency index on BIST100

This study investigates the relationship between investor risk propensity in Türkiye and the Bors Istanbul Index (BIST100), using the Risk Tendency Indicator (RTI) provided by the Central Securities Depository (MKK). Based on monthly data from April 2010 to February 2025, the analysis focuses on three RTI components: RTI-All, RTI-Domestic, and RTI-Foreign. Unit root tests confirm that all RTI series are stationary at level, while the BIST100 becomes stationary after differencing. Granger causality analysis reveals a strong unidirectional link from RTI-Foreign to the BIST100 index, emphasizing the predictive role of foreign investor sentiment in Türkiye's stock market. Additionally, there is evidence of reverse causality between RTI-All and the BIST100, suggesting a feedback loop between overall sentiment and market performance. In contrast, RTI-Domestic does not show a statistically significant relationship with the index. While the study does not account for macroeconomic control variables—a noted limitation—it highlights the growing influence of foreign investors in emerging markets. The findings suggest that sentiment indicators like the RTI can serve as valuable tools for understanding and forecasting market behavior.