Financial crises and the leading indicators: an application of Turkey

The objective of this study is to determine and analyse the leading indicators of the financial crises to predict the crises in Turkey. To achieve this goal the effects of the main economic series on Turkish economy have been examined before and after these crises occurred. 9 quarterly series have been analysed under 8 different categories to determine whether they are leading indicators of 3 financial crises experienced between 1990 and 2010 in Turkey. Considering the related literature the speculative pressure index and the logit model have been used to assess the leading indicators. While speculative pressure index has been used to quantify the experienced crises which means that it enables us to determine the leading indicators; the logit model has been used to assess the relationship between the dependent pressure index and the chosen independent variables.Key words:1. Financial crisis2. Leading indicators3. Crisis prediction4. Logit model5. Turkey.