Public debts and development of original sin indicators: Turkey samples

Along with liberalization and globalization that have taken place since the 1970s in the world, the internal and external borrowing in the financing of public expenditures is a continuing phenomenon, even as a normalized phenomenon. Living developments have also triggered financial liberalization and the structure of the debt has gained importance as currency and maturity mismatches as the driving factors of financial crises in this process. On the basis of the debt structure lies the inability of countries to borrow in the national currency from the country and abroad. To explain this situation, the Original Sin, as a result of intense crises in the 1990s, projected by Eichengreen ve Hausmann (1999) and is a concept that has been verified with a lot of work done in the future. İn their work, They distinguish between domestic and external to the Original Sin is defined as the inability of countries to borrow money with their local currency or to borrow in the domestic market for long term. Borrowing in foreign currency has been an important source of financing especially for developing countries. In our study, the reason why countries cannot borrow in long term and fixed rate in national currencies are tackled under three headings: Level of development of securities markets, İnflationary expectations, Monetary policy and lack of credibility and exchange rate regimes applied. Financial and economic development is also found to be necessary in order to redeem from the original sin problem. Existence of strong policies and institutions, monetary credibility, and flexible exchange rate regime are found as other significant factors in terms of explaining the phenomenon. Countries that faces credit market imperfections and poor contract enforcement more prone to original sin problem. As a general result of the thesis we examined the analysis of domestic and external Original Sin ratio for Turkey, the original external sin rate was calculated as 1 until 2004. Then, this coefficient began to decrease as of 2016, it was realized above 0.80. Index values rising after the 2000 crisis, as the domestic borrowing market began to deepen relatively after the 2003 regulations, although the change in the exchange rate regime was at a low level until 2013, with the falling inflation rate reducing market risk, has begun to receive high values from this year. These findings suggest that low-performing in terms of external original sin indicator of Turkey's economy. As TL is still not a convertible currency and is not preferred, the foreign original sin index is still very high at 0.90, despite the relative decline. This very high formation of the international original sin coefficient is severely limits the work being done. Because the change takes place in very small quantities, it is not very effective as a variable in analyzes. In this context, our country's policy steps require confidence-building cooperation and confidence-building innovations. With measures to increase the convertibility, the international standard sin value can be realized at least at the level of the European countries, although it may not reset the five big country currencies leading the world economy. Domestic original sin values; After the 2000 crisis, the domestic borrowing market began to deepen relatively after the 2003 regulations. Although the change in the exchange rate regime has been as low as the global financial crisis with the decreasing inflation rate along with the decreasing market rate, it has risen to the highest values with the effect of the crisis followed by the exchange of foreign currency and bearish indexed securities in 2012, especially DSIN1 value has been reset. From this point of view, it is possible to reach a result that countries that can not borrow from abroad in the form of national currency can carry out various studies in order to increase the possibility of obtaining long-term debt in the country, they can considerably decrease the domestic original sin values.