Examining the impact of financial indicators on confidence: The case of Türkiye

The main purpose of this thesis is to investigate the long-run relationships and causal linkages between the Consumer Confidence Index (CCI) and consumer loan interest rate (CLIR), deposit interest rate (DİR), and real effective exchange rate (REER) in Turkey. The study employs monthly data covering the period 2014:01–2024:12. The stationarity properties of the series are examined by conventional unit root tests as well as tests that account for structural breaks. The Bai–Perron multiple structural break test identifies three significant break dates, leading to the application of the Carrion-i Silvestre (2009) unit root test with multiple breaks. The existence of a long-run relationship is assessed using the Maki (2012) cointegration test with multiple breaks, which confirms cointegration among the variables. Long-run coefficients are estimated through FMOLS, DOLS, and CCR approaches. The results indicate that TKFO has a negative and statistically significant effect on the CCI, while MVFO and REER exert positive and significant effects. Furthermore, the Toda–Yamamoto causality analysis reveals strong bidirectional causality relationships among the variables. These findings suggest that consumer confidence in Turkey is strongly and multidimensionally linked with financial indicators. While largely consistent with the existing literature, the positive long-run effect of REER on consumer confidence provides an original contribution. The results highlight the importance of consumer confidence as a key indicator for policymakers in monitoring financial market fluctuations and shaping economic expectations.