How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul
This paper investigates the impact of inflation and inflation uncertainty on stock returns in Turkey from 2006:01 to 2024:04. The study period was selected to reflect key structural changes in the Turkish economy, including the adoption of explicit inflation targeting and the process of financial de...
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| Format: | Article |
| Language: | English |
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Atatürk University
2025-04-01
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| Series: | Trends in Business and Economics |
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| Online Access: | https://dergipark.org.tr/tr/download/article-file/4311147 |
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| author | Emre Akyurt Durmuş Çağrı Yıldırım Ömer Esen |
| author_facet | Emre Akyurt Durmuş Çağrı Yıldırım Ömer Esen |
| author_sort | Emre Akyurt |
| collection | DOAJ |
| description | This paper investigates the impact of inflation and inflation uncertainty on stock returns in Turkey from 2006:01 to 2024:04. The study period was selected to reflect key structural changes in the Turkish economy, including the adoption of explicit inflation targeting and the process of financial deepening. Stock returns in Turkey are represented by the returns of the BIST100 index, which tracks the performance of the top 100 companies with the highest trading volume and market capitalisation. To capture the effects of inflation uncertainty, ARCH/GARCH models are employed. The Johansen cointegration analysis is used to estimate the long-term relations among the variables, while FMOLS, DOLS, and CCR methods are applied to estimate long-run coefficients. The findings point out that both inflation and inflation uncertainty positively influence stock returns in Turkey. In particular, a rise in inflation uncertainty has a stronger impact on boosting stock returns than a rise in inflation itself. These results suggest that stocks serve as a safe investment option in inflationary environments. |
| format | Article |
| id | doaj-art-97e24386ccf544c4804bb73ef5401b07 |
| institution | OA Journals |
| issn | 2822-2652 |
| language | English |
| publishDate | 2025-04-01 |
| publisher | Atatürk University |
| record_format | Article |
| series | Trends in Business and Economics |
| spelling | doaj-art-97e24386ccf544c4804bb73ef5401b072025-08-20T02:17:29ZengAtatürk UniversityTrends in Business and Economics2822-26522025-04-0139211712810.16951/trendbusecon.157265455How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa IstanbulEmre Akyurt0https://orcid.org/0009-0007-3127-8055Durmuş Çağrı Yıldırım1https://orcid.org/0000-0003-4168-2792Ömer Esen2https://orcid.org/0000-0002-4762-9282TEKİRDAĞ NAMIK KEMAL ÜNİVERSİTESİTEKİRDAĞ NAMIK KEMAL ÜNİVERSİTESİTEKİRDAĞ NAMIK KEMAL ÜNİVERSİTESİThis paper investigates the impact of inflation and inflation uncertainty on stock returns in Turkey from 2006:01 to 2024:04. The study period was selected to reflect key structural changes in the Turkish economy, including the adoption of explicit inflation targeting and the process of financial deepening. Stock returns in Turkey are represented by the returns of the BIST100 index, which tracks the performance of the top 100 companies with the highest trading volume and market capitalisation. To capture the effects of inflation uncertainty, ARCH/GARCH models are employed. The Johansen cointegration analysis is used to estimate the long-term relations among the variables, while FMOLS, DOLS, and CCR methods are applied to estimate long-run coefficients. The findings point out that both inflation and inflation uncertainty positively influence stock returns in Turkey. In particular, a rise in inflation uncertainty has a stronger impact on boosting stock returns than a rise in inflation itself. These results suggest that stocks serve as a safe investment option in inflationary environments.https://dergipark.org.tr/tr/download/article-file/4311147enflasyonenflasyon belirsizliğihisse senedi getirisiborsa i̇stanbulinflationinflation uncertaintystock returnborsa istanbul |
| spellingShingle | Emre Akyurt Durmuş Çağrı Yıldırım Ömer Esen How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul Trends in Business and Economics enflasyon enflasyon belirsizliği hisse senedi getirisi borsa i̇stanbul inflation inflation uncertainty stock return borsa istanbul |
| title | How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul |
| title_full | How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul |
| title_fullStr | How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul |
| title_full_unstemmed | How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul |
| title_short | How Inflation and its Uncertainty Affect Stock Returns: Insights from Borsa Istanbul |
| title_sort | how inflation and its uncertainty affect stock returns insights from borsa istanbul |
| topic | enflasyon enflasyon belirsizliği hisse senedi getirisi borsa i̇stanbul inflation inflation uncertainty stock return borsa istanbul |
| url | https://dergipark.org.tr/tr/download/article-file/4311147 |
| work_keys_str_mv | AT emreakyurt howinflationanditsuncertaintyaffectstockreturnsinsightsfromborsaistanbul AT durmuscagrıyıldırım howinflationanditsuncertaintyaffectstockreturnsinsightsfromborsaistanbul AT omeresen howinflationanditsuncertaintyaffectstockreturnsinsightsfromborsaistanbul |