ISE review

Istanbul Stock Exchange

Volume: 8 No: 30

Subjects

· Investors’ Selection Between Two Financial Markets: A Conditional Correlation Approach
Oral Erdoğan & Harald Schmidbauer

· Exchange Rate Exposure: An Empirical Application for Textile Industry on the Istanbul Stock Exchange
Sadık Çukur & Yusuf Volkan Topuz

· Mudaraba-Venture Capital Closed-end Mutual Funds and Mudaraba-Venture Capital Open-end Mutual Funds
Halil İbrahim Bulut

· Global Capital Markets

· ISE Market Indicators

· ISE Publication List

Investors' Selection Between Two Financial Markets: A Conditional Correlation Approach

Oral ERDOGAN
Harald SCHMIDBAUER

Abstract
This study focuses on a certain aspect of substitution effect between FX and stock market investments. The motivation for this approach is that a forecast of future correlations and volatilities is the basis for pricing models, according to Engle (2002). Forecasts are obtained via a methodology based on a bivariate GARCH model. For illustration, we choose the Turkish market, since the two markets, the FX and the stock markets, are perceived as alternative investment opportunities by
Turkish investors. Our conclusion is that investors should be aware of the degree of substitution, and hence of risk spillovers, at the time of their investment.

Exchange Rate Exposure: An Empirical Application For Textile Industry On The Istanbul Stock Market

Sadık ÇUKUR
Yusuf Volkan TOPUZ

Abstract
Exchange rate exposure has been one of the most important subject in international finance after the introduction of the flexible exchange rate system at the beginning of 1970s. Firms’ financial positions are affected due to unexpected and continuous fluctuations in foreign exchange rates. The changes in economic variables will affect the value of the firm unavoidably. Therefore the relationship between foreign exchange rates and the market value of the firm should be investigated. We present a study on the Istanbul Stock Exchange Market (ISEM) for textile industry at the firm level. We construct a sectoral real effective exchange rate instead of general real effective exchange rates. We attempt to explain the exposure with this explanatory variable. We also use lead models instead of contemporaneous or lagged model and find that lead model shows a clear exposure effect for the textile industry.

Mudaraba-Venture Capital Closed-End Mutual Funds And Mudaraba-Venture Capital Open-End Mutual Funds

Halil İbrahim BULUT

Abstract
The important part of this study attempts to explain that both venture capital and interest-free financing are based on the similar ground, if not the same. Two new models called Mudaraba-Venture Capital Closed-End Mutual Funds and Mudaraba-Venture Capital Open-End Mutual Funds, based on both the similarities and the needs of financial innovation in the interest-free financing system, are detailed. It is believed that the development of these two models could make some improvements not only in the interest-free financing system but also in the venture capital, the entrepreneurial finance and the capital markets.