IMPACTS OF INTERNATIONAL CAPITAL INFLOWS ON THE TURKISH ECONOMY

Ahmet ÇİMENOĞLU (Yapı Kredi Bankası)
Nurhan YENTÜRK (İstanbul Technical University)

The main objective of this study is to investigate the effects of international capital inflows on the Turkish economy and the mechanisms by which these effects are realised. In doing this, firstly the economic and financial environment that prevailed in Turkey in most of 1990s will be analysed with specific reference to its effect on international capital flows. The second task is to determine the channels through which the international capital affects Turkish economy. These channels will be studied both from the demand and supply side perspectives. From the demand side perspective, the channels through which the net foreign capital inflows are affecting private sector consumption demand will be studied. On the supply side, the effects of net foreign capital inflows on the bank behaviour, both on the consumer and commercial sides, will be investigated. These two investigations will help to analyse how net foreign capital inflows affect domestic investments. Exploring the sectoral price data, the distribution of the investments among the sectors that are aggregated into two as tradable and non-tradable will be studied before concluding about the overall impact of net foreign capital flows on the economy.