Investigating the Asymmetric Effects of Geopolitical Risks on Portfolio Investments in Turkish Economy

ECE O., Çadırcı B. D.

İzmir iktisat dergisi, vol.39, no.1, pp.219-236, 2024 (Peer-Reviewed Journal) identifier

  • Publication Type: Article / Article
  • Volume: 39 Issue: 1
  • Publication Date: 2024
  • Doi Number: 10.24988/ije.1326586
  • Journal Name: İzmir iktisat dergisi
  • Journal Indexes: Directory of Open Access Journals, TR DİZİN (ULAKBİM)
  • Page Numbers: pp.219-236
  • Dokuz Eylül University Affiliated: Yes


This study aims to analyze the impact of geopolitical risks faced by the Turkish economy on international portfolio investments. Since it is thought that these risks may have asymmetric effects, the study utilizes the NARDL methodology. Based on this situation, the BDS linearity test was employed to assess the variables, revealing the presence of a non-linear structure in the time series. As a result of the NARDL analysis, it is observed that the long-run and short-run effects of geopolitical risks differ, and the asymmetric relationship, which is moderate in the short-run, turns into a symmetric structure in the long-run. In this framework, it is concluded that international portfolio investors increase their investments to take advantage of return opportunities in the short run in the face of increased geopolitical risk, but prefer safe economies in the long run. The Turkish economy, in order to reassure investors, is of great importance to increase transparency in the fields of economy, justice, and governance, to ensure and strengthen the independence of institutions, and especially to put economic policies on a rational basis.