Financial crisis and the transmission channels (Theoretical and empirical approaches)

The dissertation aims at determining whether the Turkish economy is affected by financial turmoils occurring in other economies included in dataset and also aims at testing a hypothesis which states that an interdependence effect existing in non-turmoil periods can weaken, can disappear completely and can veer as well in turmoil periods.To reach purposes of the study mentioned above; Probability Model of Exchange Market Pressure Index due to Eichengreen et al. (1996), Outliers Test due to Favero and Giavazzi (2002), Threshold Test due to Pesaran and Pick (2007) as well as a dataset for the period of (February 1999-October 2008) of most important trade partners of Turkey, leading industrialized countries and several developing countries supposed to have potential for competition with Turkey in the matter of international investments.Achieved empirical results from the study can be summarized as follows: (1) Any satisfactory evidence implying that Turkish economy is affected by financial turmoils occurring in other economies included in dataset could not be reached. (2) The hypothesis which states that an interdependence effect existing in non-turmoil periods can weaken, can disappear completely and can veer as well in turmoil periods must be accepted. (3) Almost none of the economies included in dataset are able to keep themselves fully isolated from other economies.Therefore, a powerful organization or reconstruction of an existing organization, which are able to design international policies for stability of international financial system and to ensure international coordination to practice the policies, is needed. Consequently, achieved empirical results from the study support the İstanbul Decisions made at 2009 IMF-WB Annual Meetings.