Analysis of monetary crisis theories and determinants: Economy of Turkey

The speculative attacks to the economies of Latin American countries Argentina, Chile and Uruguay in 1980s, and the monetary crises in the economies of Finland, Sweden, Mexico, South East Asia, Russia, Argentina and Brazil after 1990 prepared the ground for the creation of Monetary Generation Models to explain the causes of these crises. Applicable studies conducted on financial crises in Latin American countries also contributed to empirical studies aiming to identify the leading indicators in the emergence of financial crises in 1990 and afterwards. The basic indicators of the generally accepted monetary crisis may be listed as excessive fluctuations in the exchange rate, excessive rises in overnight interest rates, and significant reductions in foreign exchange reserves. There has not been a full consensus on which macroeconomic variables among these indicators will cause a financial crisis. In this study, it was ensured that the determinants of monetary crises were identified by addressing the theoretical information of the Generation Models created for monetary crises, and by including Speculative Pressure Index Calculation for the Turkish economy. For this purpose, the macro variables that might cause a monetary crisis were predicted with the Probit Model, the Marginal Impact Coefficients of the macroeconomic variables used in the study on the monetary crisis were calculated with the help of this model, and their relations with monetary crises was interpreted for the Turkish economy. Keywords: Monetary crisis, leading and basic indicators of monetary crisis, monetary crisis generation models, speculative pressure index, probit model.