Using a unique dataset of house prices and rents and a difference-in-differences methodology, we provide evidence consistent with a reassessment of earthquake-related risks in Istanbul following the Kahramanmaras Earthquake Sequence on February 6, 2023. We find that post-earthquake increases in both house prices and rents were relatively more subdued in high-risk neighborhoods than in lower-risk neighborhoods, suggesting that seismic safety became more strongly capitalized into housing-market outcomes after the earthquake. Furthermore, houses built before the Turkish Earthquake Code of 2007 are discounted more strongly in high-risk areas relative to newer properties, highlighting the importance of building standards in shaping market responses to seismic risk. Finally, the post-earthquake premium associated with lower-risk locations is less pronounced in neighborhoods with considerably higher socio-economic status. These findings have important policy implications for earthquake-risk disclosure, building-code enforcement, and earthquake-resilience policies in Türkiye.

This study investigates house price dynamics in Türkiye using monthly data for 55 cities and 87 districts over the period 2010–2022. Employing a three-stage empirical framework, we first detect exuberant episodes using Generalized Sup Augmented Dickey-Fuller (GSADF) and backward Sup ADF (BSADF) right-tailed unit root tests at both the city and district levels. We then analyze co-explosivity among the five largest cities (Istanbul, Ankara, Izmir, Bursa, and Antalya) using logistic regression models. Finally, we explore the drivers of bubble formation across 55 cities using panel logistic regression models. The results indicate that most cities and districts experienced synchronized explosive house price increases across three periods: 2013–2015, 2017–2018, and 2020–2022. The 2021–2022 period saw the most widespread bubbles, particularly in the western and Marmara regions than in the eastern part of the country, indicating a clear regional asymmetry in housing market dynamics. The evidence suggests that housing price exuberance was more synchronized in the largest urban markets. The panel logistic regression analysis revealed that new house sales were associated with bubble formation. In contrast, mortgage-financed sales and higher mortgage rates reduced the likelihood of bubbles, highlighting the stabilizing role of credit costs. Macroeconomic shocks from the COVID-19 pandemic and low interest rates were key drivers of bubble dynamics. These findings suggest that housing market stability requires locally targeted macroprudential and credit policies to prevent local and global shocks.

This study analyzes the dynamics of house prices across Istanbul’s districts using a unique dataset of house prices and socioeconomic characteristics from 2010Q1 to 2022Q1. The log-t convergence test identifies four convergence clubs, with their formation beginning after 2015, highlighting the heterogeneity within Istanbul's housing market. The spillover index shows moderate spillovers, predominantly flowing from less affluent to more affluent districts. Additionally, LASSO regression suggests that the formation of convergence clubs in Istanbul closely reflects the city's socioeconomic conditions and levels of material prosperity. Specifically, financial wealth, middle and low-socioeconomic status households, and the presence of certain retail chains (e.g., Mado, Starbucks, and Domino's Pizza) are significant factors in the formation of these clusters. Overall, the housing divide in Istanbul appears to be largely driven by income and socioeconomic class.

Turkey is the world's biggest refugee hosting nation, and Istanbul, Turkey's commercial capital and Europe's largest metropolitan city by population, is home to almost 1,500,000 Syrians. We investigate the short-run impact of refugees on house prices in Istanbul's districts. We find a negative impact of massive immigration on house prices.

Since the first case of COVID-19 in Turkey, there has been a lingering question as elsewhere in the world: “When will or should the government impose severe restrictions to protect public health?” From a public health perspective, there is value in developing a model to support proactive implementation of social policies. This study aimed to show the benefits of using a novel econometric test (the Generalized Supremum Augmented Dickey-Fuller Test) to detect explosive behavior (bubbles) in Turkey’s daily COVID-19 cases and deaths. Results from the analysis demonstrated a link between identified explosive episodes and critical public health decisions, especially in the case of daily new deaths. They also showed a negative relationship between the formation of exuberant behavior during the pandemic and the vaccination rate. Public health policymakers can incorporate this method into their arsenal to evaluate the overall health situation in combating the pandemic and respond accordingly. Furthermore, among the lessons learned from the Turkish experience is the importance of having a coronavirus scientific advisory board in the decision-making process and the ability to promptly implement policy measures. JEL Codes: C22, C58, I10, I18

We study mildly explosive behaviour in house prices in Istanbul at both aggregate and disaggregate levels via GSADF tests. In contrast to previous studies, our results suggest multiple episodes of price exuberance in Istanbul and most districts. Most boroughs synchronically experienced explosive house prices in 2014-2015; and more powerfully during the last episodes of COVID-19. We also show that financial variables, including low mortgage interest rates and high stock prices, increased the probability of explosiveness.

PurposeThis paper aims to examine the convergence pattern of residential house prices in a panel of 55 major cities in Turkey over the period between 2010 and 2018 and to investigate the determinants of convergence club formations.Design/methodology/approachThe authors applied the log t-test to identify the convergence clubs and estimated ordered logit model to determine the key drivers.FindingsThe results suggest that there are five convergence clubs and confirm the heterogeneity of the Turkish housing market. Istanbul, the commercial capital, and Mugla, an attractive tourist destination, are at the top of the housing market and followed by the cities located in the western part, particularly along the Aegean and Mediterranean coasts of Turkey. Moreover, the ordered logit model results point out that the differences in employment rate, climate, population density and having a metropolitan municipality play a significant role in determining convergence club membership.Practical implicationsLarge-scale policy measures aiming to increase employment opportunities in rural cities of central and eastern provinces and providing lower land prices and property taxes in the metropolitan cities of Turkey can help mitigate some of the divergence in the house prices across cities.Originality/valueThe novelty of this study lies in employing a new data set at the city level containing 55 cities in Turkey, which is by far the largest in terms of city coverage among emerging market economies to implement the log t-test. It also contributes to the literature on city-specific determinants of convergence club formation in the case of an emerging economy.

Citizenship by investment (CBI) programs have recently garnered significant academic and media attention. Turkey introduced such a program in 2017 that offers citizenship in exchange for investment in residential property. Through the program, thousands of foreigners, mainly from the Middle East and Asia, have purchased houses, particularly in Istanbul. Foreigners' share of total houses sold in Istanbul almost sextupled and exceeded 10% of total sales. This study estimates the short-run impact of relatively wealthy foreigners on the residential property prices in Istanbul investing to buy a Turkish passport. It finds that the Turkish CBI program positively impacts house prices by 2% in the districts, which are likely to be favored most by immigrant investors.

<p> </p> <p>Since the first case of Covid-19 in Turkey, there has been a blank question as elsewhere in the world: "When will or should the government impose severe restrictions to protect public health?" This study shows how to detect the episodes during which the pandemic displays explosive behaviour, thereby asking for stricter restrictions. It also aims to document the link between explosive periods in the COVID-19 associated deaths and cases in Turkey and policy measures taken by the Turkish government.</p>

This paper examines price convergence among 26 regions of Turkey using general and disaggregated monthly consumer prices between 2005 and 2019. In contrast to previous studies, the results provide evidence for convergence clubs (multiple equilibria) and support the heterogeneity of consumer prices across Turkish regions. This finding is particularly valid for the disaggregated prices where there exist two to four clubs. There is also an increase in the number of convergence clubs in recent years. That is, market integration or the law of one price in Turkey does not appear to be achieved not only for the prices of nontradable goods but also for those of tradable goods either, most likely due to a combination of factors including higher exchange rate volatility, rising inflation and unrelenting regional socio-economic disparities. Our results show that the inflation-targeting regime does not help converge the consumer price levels across the regions.

Purpose This paper aims to examine the per capita income convergence of 57 member countries of the Organization of Islamic Cooperation (OIC) over the period 1990–2017 and to investigate the determinants of convergence club formations. Design/methodology/approach The authors applied the methodology of Phillips and Sul (2007, 2009) to identify the convergence clubs and estimated several-ordered logit models to determine the key drivers. Findings The results support existence of two convergence clubs and one diverging unit, indicating that 30 and 26 member countries form two separate groups converging to their own steady-state paths. They also suggest a significant productivity divergence between these clubs. The authors showed that the number of convergence clubs started to decline after the global financial crisis in 2008. Moreover, they found that fixed capital formation, education and political stability are key drivers of convergence club membership. Practical implications There is a strong need for large-scale policy interventions to close the gap between leading and lagging clubs of the OIC. A substantial investment in human and physical capital seems necessary for lower-income OIC countries. Originality/value This is the first empirical study on the existence of convergence clubs among member countries of the OIC.

This paper employs a DEA-type Malmquist index approach to evaluate the impact of financial liberalization on the productivity changes of public, private and foreign banks in Turkey during the period between 1981 and 1990. The results indicate that all forms of banks have benefited from financial liberalization. However, foreign banks were found to be the most productive, followed by private banks and public banks respectively. The major source of productivity gains is scale changes for public and private banks and technical progress for foreign banks. It also seems that productivity growth indices of all banks converge towards the end of liberalization period.

This paper explores the causal relationship between stock prices and volume figures for stock markets in the Czech Republic, Hungary, Poland, Russia, and Turkey. Prior to running causality tests, the time series properties of the data are carefully investigated and special attention is given to the choice of optimal lag order. Granger causality tests, based on the Toda-Yamamoto (1995) procedure, reveal that there is no causal relationship between the variables in the Czech Republic. In Hungary, there is a bidirectional causality irrespective of volume or market turnover tested. In Poland, while there is bidirectional causality between stock prices and volume, there exists a unidirectional causality running from market turnover to stock prices. The stock prices unidirectionally cause both volume and market turnover without any feedback in the case of Russia and Turkey. These results have important implications regarding market efficiency and the effects of different market characteristics on the stock price/volume relation.

Like many developing countries, Turkey has also given priority to the development of tourism industry as a part of its economic growth strategy. This study intends to investigate whether tourism has really contributed to the economic growth in Turkey. The interaction between tourism and economic growth is investigated by making use of leveraged bootstrap causality tests. This method is robust to the existence of non-normality and ARCH effects. Special attention is given to the choice of the optimal lag order of the empirical model. It is found that the tourism-led growth hypothesis is supported empirically in the case of Turkey.

This paper examines the causality between the exchange rates and stock prices in the Middle East and North Africa Region before and after Asian financial crisis. We empirically find that there is a unidirectional Granger causality from exchange rates to stock prices for Israel and Morocco before and after the Asian financial crisis, and for Jordan only after the crisis. However the causality runs from stock prices to exchange rates for Turkey after the Asian financial crisis. Moreover, we do not find any support for causal relationship between these two variables for Egypt

Using a non-parametric methodology, this paper analyzes managerial and scale efficiencies in the Jordanian banking sector over the period 1996-2001. The results indicate that the typical Jordanian bank could obtain significant (input and cost) savings should they catch up with the best practice banks (as much as 40%). Most of the managerial inefficiency is due to scale inefficiency (output related) rather than pure technical inefficiency (input related). We also find that most of the banks in Jordan experience increasing returns to scale in their operations. Apparently, significant economies of scale are available, could the Jordanian banks expand their operations by either internal or external growth.

This study delineates overall financial characteristics of the Turkish non‐financial firms listed in the Istanbul Stock Exchange across a variety of ownership variables. It essentially compares the performance of affiliates of diversified Turkish business groups with that of unaffiliated firms. The article notes that firms affiliated with diversified Turkish business groups do not differ significantly from unaffiliated firms in terms of accounting and stock market measures of performance. The findings also indicate that the performance measures of family‐owned firms are not significantly different from those of non‐family‐owned firms. Results also suggest that foreign‐owned firms perform significantly better in terms of return on assets than domestic firms, but not in terms of other performance measures.