The Effect of Macroeconomic Variables On Participation Funds: ARDL Bounds Test Approach

Participation banks operating according to Islamic methods are gaining importance in Turkey day-to-day. Participation banks have attracted the attention of investors in recent years by acting strongly according to market factors, especially in an environment of uncertainty. Macroeconomic variables are quite volatile increasing the interest in participation banks in Turkey. The volatility in macroeconomic variables adversely affects financial markets, especially during crisis periods. The relationship between participation banks and macroeconomic variables is a matter of curiosity. It is aimed to examine the relationship between participation banks and macroeconomic variables in Turkey. Dependent variable participation funds in the analysis inflation rate, deposit interest rate, exchange rate, and Turkey uncertainty index are used as independent variables. The effect of macroeconomic variables on participation funds has been tested with the ARDL bounds test approach. As a result, it has been determined that the deposit interest rate affects participation funds negatively in the long and short term. The exchange rate has been found to affect participation funds negatively in the long run and positively in the short run. It has been determined that the inflation rate affects participation funds positively in the long run. No statistically significant relationship has been found between the uncertainty index and participation funds.