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Reforms and Supervisory Organizations: Lessons from the History of the Istanbul Bourse, 1873–1883

In: Research in Economic History

Author

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  • Elmas Yaldız Hanedar
  • Avni Önder Hanedar
  • Ferdi Çelikay

Abstract

Inefficiencies in the fiscal and monetary systems of the Ottoman Empire led to a higher debt burden over time and the bankruptcy for the Ottoman state in 1875. To deal with these inefficiencies, reforms were implemented: supervisory organizations were established and the gold standard was adopted. How did investors at the Istanbul Bourse view these reforms? We manually collected data on the price of Ottoman government bonds on the Bourse from 1873 to 1883. Using the generalized autoregressive conditional heteroscedasticity (GARCH) methodology, we identify short-run and permanent changes in volatility of bond returns subsequent to the reforms. Our results suggest investors responded positively, by accepting lower yield premia, to adoption of the gold standard, and foundation of the Ottoman Public Debt Administration which had European sponsors, but did not respond positively to reforms that relied on purely local institutions.

Suggested Citation

  • Elmas Yaldız Hanedar & Avni Önder Hanedar & Ferdi Çelikay, 2017. "Reforms and Supervisory Organizations: Lessons from the History of the Istanbul Bourse, 1873–1883," Research in Economic History, in: Research in Economic History, volume 33, pages 115-137, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rehizz:s0363-326820170000033004
    DOI: 10.1108/S0363-326820170000033004
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    References listed on IDEAS

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    1. Avni Önder Hanedar & Elmas Yaldız Hanedar & Erdost Torun & Hasan Murat Ertuğrul, 2018. "Dissolution of an Empire: Insights from the İstanbul Bourse and the Ottoman War Bond," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(5), pages 557-575, July.
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    Cited by:

    1. Avni önder Hanedar & Talat Ulussever & Murat Ertuğrul, 2018. "Identifying the Default: The Ottoman Empire and the İstanbul Bourse in the nineteenth century," Working Papers 2018/1, Turkish Economic Association.

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      Keywords

      Reforms; financial control organizations; moratorium; the Istanbul bourse; crises; GARCH; G1; N25; N45;
      All these keywords.

      JEL classification:

      • G1 - Financial Economics - - General Financial Markets
      • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
      • N45 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Asia including Middle East

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