The Sensitivity of Borsa Istanbul Banks Index Growth to Exchange Rates, Oil and Gold Price Changes

In recent years, due to a number or financial and political crises the Turkish economy has been marked with an increasing economic instability. Oil, Gold and the Turkish Lira to dollar exchange rate have exhibited increasing volatility as well in these years. Since banks are considered key actors for every economy, in this thesis, the sensitivity of the Turkish Lira to dollar exchange rate, global oil and gold prices are examined relative to the Turkish banks index growth (BISTBANKS). To investigate this relationship, the method of Ordinary Least Square estimation is used. Weekly data for the BISTBANKS Index, USD/TRY, oil and gold prices are used in this analysis over the period of 2016-2018. The empirical results obtained from this research demonstrate that the Turkish Lira to the dollar exchange rate and oil have significant effect on BISTBANKS Index growth, while the influence of gold is insignificant. This study suggests to shareholders of Turkish banks to sell their shares when USD/TRY increases and buy when it decreases. In addition, in case of world boom economy, investors may invest in Turkish banks when global oil price inclines and vice versa. Keywords: exchange rate, oil, gold, BISTBANKS index.