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Effects of reforms and supervisory organizations: Evidence from the Ottoman Empire and the Istanbul bourse


  • Elmas Yaldiz Hanedar

    (Yeditepe University, Faculty of Economics and Administrative Sciences, Istanbul, Turkey)

  • Avni Önder Hanedar

    () (Sakarya University, Faculty of Political Sciences, Sakarya, Turkey and Dokuz Eylül University, Faculty of Business, Izmir, Turkey)

  • Ferdi Çelikay

    (Eskisehir Osmangazi University, Faculty of Economics and Administrative Sciences, Eskisehir, Turkey)


Inefficiencies in fiscal and monetary systems of the Ottoman Empire led to higher debt burden over time and the bankruptcy for the Ottoman state in 1875. To deal with these inefficiencies, reforms were implemented, as supervisory organizations were established during the default period. We ask how investors traded at the Istanbul bourse evaluated the outcomes of these reforms and organizations. We manually collect data on price of the General Debt bond from 1873 to 1883. Using the GARCH methodology, we examine the volatility jumps in return of the bond due to the reforms and supervisory organization in the Ottoman Empire. The volatility changes are indicators for risk perceptions of the investors. Our empirical results support that investors positively responded to foundation of the Ottoman Public Debt Administration and the acceptance of gold standard, heralding the persistent decrease in the risk premia over time. The Ottoman case is instructive for the understanding of today’s economic situation in emerging markets such as Greece, while we could argue that long-lived and comprehensive measures with foreign creditors’ supervision on fiscal and monetary systems matter more for investors’ perceptions. No empirical research studies the impacts of the reforms and supervisory organizations on the Istanbul bourse, as this large dataset has never been used before.

Suggested Citation

  • Elmas Yaldiz Hanedar & Avni Önder Hanedar & Ferdi Çelikay, 2017. "Effects of reforms and supervisory organizations: Evidence from the Ottoman Empire and the Istanbul bourse," Working Papers 0112, European Historical Economics Society (EHES).
  • Handle: RePEc:hes:wpaper:0112

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    References listed on IDEAS

    1. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
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    7. David S. Adams, 2015. "Contemporary perceptions of the First World War reflected in the capital markets," Scandinavian Economic History Review, Taylor & Francis Journals, vol. 63(1), pages 1-23, March.
    8. Hanedar Avni Önder, 2015. "Foreign Bank Entry in the Late Ottoman Empire: The Case of the Imperial Ottoman Bank," Review of Middle East Economics and Finance, De Gruyter, vol. 11(3), pages 207-223, December.
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    More about this item


    Reforms; Financial control organizations; Moratorium; the Istanbul bourse; Crises; GARCH.;

    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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