COULD THE FINANCIAL SERVICES CONFIDENCE INDEX AFFECT FOREIGN STOCK AND PORTFOLIO INVESTMENTS OF DOMESTIC INVESTORS?

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In this study, it is aimed to reveal whether the financial services confidence index affects the foreign stock and portfolio investments of domestic investors. For this purpose, between 2012-2020, in Turkey, the amounts of domestic investors total foreign stock and portfolio investments in US dollars, and financial services confidence index values are used. By creating VAR models between variables, Granger Causality Tests are applied and cointegration and traditional regression analyzes are performed. According to the results, one-way causality relationships between the financial services confidence index and the foreign stock and portfolio investments of domestic investors from the financial services confidence index to the foreign stock and portfolio investments are determined. Another finding is that the decrease in confidence in financial services might lead an increase in the preference of domestic investors to foreign stock and portfolio investments, and vice versa, a decrease. It is concluded that the financial services confidence index is a leading indicator of investments abroad. It is thought that the financial service confidence index could be used to enable the detection of some irrational tendencies such as herd behavior, confirmation and loss aversion biases in investors and thus increase the predictability of financial markets. In order to prevent domestic investors from diverting their investments abroad, it is recommended to carry out studies to create and improve the perception of confidence in financial services in the country.

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Behavioral Finance , Financial Services Confidence Index , Domestic Investor , Foreign Portfolio Investment , Foreign Stock Investment

Abant Sosyal Bilimler Dergisi

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Abant Sosyal Bilimler Dergisi