Inflation, Firm Performance, and Policy-Induced Uncertainty: Evidence from Turkey

This article focuses on the relationship between inflation, firm performance, and policy-induced ‎uncertainty in Turkey, where persistent inflation has coincided with frequent changes in economic ‎policy. In such an environment, firms operate under conditions of limited predictability, which ‎directly affects their financial performance and strategic decisions. Using firm-level data from publicly listed companies in Turkey, the study examines the association between inflation and policy-induced uncertainty and key performance indicators, including return on assets and return on equity, with particular attention to their interaction. The empirical findings suggest that higher inflation is linked to weaker firm performance. In ‎addition, policy-induced uncertainty appears to reinforce this negative relationship, indicating that ‎firms are more adversely affected when inflationary pressures coincide with an unstable policy ‎environment. These results point to the role of institutional conditions and policy credibility in ‎shaping firm-level outcomes in emerging economies characterized by macroeconomic instability‎.