The Effect of Country Credit Default Swap Premiums on Companies’ Investment Policies: An Empirical Study in Borsa Istanbul

Credit default swaps (CDSs), which have become one of the main indicators of the economy in recent years, emerged in the mid-1990s as a result of synthetic securitization efforts that enabled banks to reduce the size of their balance sheets and move more capital, are transferring the risk of default among investors. The aim of this study is to research the impact of country CDS premiums on companies' investment policies which are vital for companies by using panel data analysis method. Companies listed on Borsa Istanbul (Bist 100) in the 2015- 2022 period were included in the research. The results of the variables were obtained by using Hansen's (1995) Covariate-Augmented Dickey Fuller (CADF) test, one of the second generation panel unit root tests. Breusch-Godfrey/Wooldridge and Durbin-Watson tests were used to test the autocorrelation assumption. For the test of the variable variance assumption, the Studentized Breusch-Pagan test was used. As a result, as expected a negative relationship was found between the country CDS premiums and the investments of the companies whose stocks are listed in Borsa Istanbul.