UNCONVENTIONAL MONETARY POLICIES AND FINANCIAL MARKETS: A CAUSALITY ANALYSIS FOR TURKIYE

This study investigates the influence of the Central Bank of the Republic of Türkiye’s unconventional monetary policy tools on the BIST100 index, utilizing monthly data from January 2013 to December 2023. The analysis focuses on the Reserve Requirement Ratios (for both Turkish Lira and Foreign Currency) and the Late Liquidity Window Rate as measures of unconventional policy, while the BIST100 index represents financial market performance. The results indicate a unidirectional causality from the Late Liquidity Window Rate to the BIST100 index, suggesting that policy impacts the market through a significant but narrow channel. Conversely, no causal relationship is observed between the reserve requirement ratios and the BIST100 index. These findings highlight the limited efficacy of the Central Bank’s unconventional policy tools in stabilizing financial markets.