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Interest rate and Economic Growth as Determinants of Firm Investment Decision: An Investigation on BIST listed firms

Author

Listed:
  • Hasan AYAYDIN

  • Savaþ DURMUÞ

    (Gumushane University, Turkey.)

Abstract

This study aims to investigate the effect of political uncertainty as a determinant of investment decisions on investment decisions of firms. For this purpose, this study involves 147 BIST (Istanbul Stock Exchange) listed firms displaying activity in the industry sector between 2008 and 2013. Panel data analysis with relevant quarterly data was used to analyze the relationship between political uncertainty and investment decisions of firms. Analysis results have revealed a statistically significant relationship between investments of firms and the variable representing 29 March 2009 General Local Elections, 12 June 2011 General Elections and 12 September 2010 New Constitution Referendum as an indicator of political uncertainty. This verifies the argument suggesting an uncertainty due to elections may negatively affect investments of firms through inefficient capital allocation, and this can be said to provide a strong message with regard to important economic effects of political uncertainty.

Suggested Citation

  • Hasan AYAYDIN & Savaþ DURMUÞ, 2016. "Interest rate and Economic Growth as Determinants of Firm Investment Decision: An Investigation on BIST listed firms," Journal of Economics and Political Economy, KSP Journals, vol. 3(1), pages 160-169, March.
    • Handle: RePEc:ksp:journ1:v:3:y:2016:i:1:p:160-169
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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