Crisis processes and financial risk management: A research on the construction industry

The events that took place between 2018 and 2023 have led to a very challenging period in both the world and Turkish economies. In 2018, the trade war between the US and China led to a deterioration in confidence and increased uncertainty in the world economy. In the same period, the US and Europe said that they would impose sanctions on Turkey for some political reasons, which led to a sudden increase in exchange rates in Turkey. In 2020, as the world economy started to recover, the Covid-19 outbreak that occurred in China in 2019 spread all over the world. The measures taken against the outbreak negatively affected the world economy, including Turkey, causing the outbreak to turn into a global economic crisis in a short time. In 2022, before we had fully recovered from the negative effects of the pandemic, a crisis erupted between Russia and Ukraine, the world's largest energy, commodity and food suppliers. After this crisis, prices increased worldwide. The impact of the war between Russia and Ukraine was felt more severely in the Turkish economy than in other economies. The events that took place between 2018 and 2023 caused continuous fluctuations in Turkey's macroeconomic variables. The construction sector, which is sensitive to crises and has an important place in the Turkish economy, has been seriously affected by these fluctuations and the risks they bring with them. This study aims to investigate the impact of the events between 2018 and 2023 on the construction sector in Turkey. For this purpose, firstly, the changes in the construction sector between 2018 and 2023 were analyzed and it was concluded that the period between 2018 and 2022 was a crisis period for the construction sector in Turkey. In addition, a survey was conducted to investigate the financial risks faced by the enterprises operating in the sector in this process and the methods they apply for financial risk management. As a result of the study, information was collected about how the enterprises operating in the construction sector were affected by this process, which risks they faced and the methods they applied to manage these risks. Most of the enterprises think that this process is negative for both their own businesses and the national economy. In addition, it is seen that the most common risk encountered in this process is currency risk, while the least common risk is credit risk. The biggest problem for businesses between 2018-2023 was the unexpected increases in costs. The surveyed enterprises generally use in-house methods developed by themselves to manage their financial risks. It is seen that the use of derivative products by enterprises is not sufficient. In line with the information obtained at the end of the study, recommendations were made to enterprises on financial risk management.