Crises as the reason international capital movements and country risk in Turkey

The financial liberalization which started in the 1980's has speeded up the process for the nee d for foreign resources by the countries in order to realize their economic progress, the motive to direct their capital to more profitable investment fields, and the consensus on these issues in both developed and developing countries. There has been a number of positive and negative consequences of this process. These effects occupy a large place in the academic literature. The aim of this thesis is to investigate whether foreign direct investment and country risk (financial and economic risks), real exchange rates, unemployment rates and total reserves might be the reasons of the crises in Turkey. In the first chapter, definitions and types of crisis will be explained within the framework of economic theories. The reasons of financial crisis, measures to be taken, classification of crisis, models of crisis in Turkey and in the World will be evaluated in this chapter. In the second part, definitions and types of risk and country risk; historical evolution and importance of risk and country risk; sources and factors of country risk; methods and institutions to measure country risk will be stated; and literature survey has been made to clarify the country risk and its consequences. In the third section, it has been studied that whether exchange rate, trade openness, unemployment rate and corruption perception index have a direct effect on the foreing direct investment. In this respect, the impact of inflows of foreign direct investment on selected macroeconomic indicators, by using the annual data between 1995-2017 and the multiple linear regression method, has been analyzed. In the fourth chapter, foreign direct investment, portfolio investment, other types of invesment, financial risk, economic risk, real exchange rate, unemployment rate and total reserves have been investigated as the possible reasons of crises in Turkey. In line with the aim of the thesis, it has been analysed that whether the cirises in Turkey have been affected by the macroeconomic variables, by using Probit analysis and the monthly data for the period between 2002-2015. The analysis of marginal effects of the variables have also been made. According to the Probit model results, foreign direct investment, portfolio investment, other types of investments, financial risks, exchange rate variables and international reserve variables have been proven statistically insignificant. On the other hand, unemployment rate is found to be significant and important.