Belma Ozturkkal

A behavioral analysis of investor diversification

This paper studies the link between individual investors’ portfolio diversification levels and various personal traits that proxy informational advantages and overconfidence. The analysis is based on objective data from the largest Turkish brokerage house tracking 59,951 individual investors’ accounts with a total of 3,248,654 million transactions over the period 2008–2010. Wealthier, highly educated, older investors working in the finance sector and those trading relatively often show higher diversification levels possibly because they are better equipped to obtain and process information. Finance professionals, married investors, and those placing high-volume orders through investment centers show poorer diversification possibly as a reflection of overconfidence. Our analysis reveals important nonlinear effects, implying that the marginal impact of overconfidence on diversification is not uniform across investors but varies according to the investors information gathering and processing abilities.

Determinants of Saving-Borrowing Decisions and Financial Inclusion in a High Middle Income Country: The Turkish Case

ABSTRACT We use a representative survey of the Turkish household sector and investigate factors impinging on saving-borrowing behavior. We run four probit regressions to elucidate (i) the saving decision, (ii) asset choice or portfolio composition for those who save, (iii) the bank loan decision and lastly (iv) the formal versus informal borrowing decision. We find income, education, marital status and region within country strongly correlate with those decisions. We offer some insights regarding the influence of variables like rural to urban migrant status and religious belief on saving and borrowing decisions. We discuss the long-term implications of our findings on the Turkish household savings performance.

Financial Assessments and Investigation of Indicators of Financial Well-Being in an Emerging Market

This study investigates the financial self-assessments and households’ well-being using a national survey of 2,567 households in Turkey. We use Maslow’s hierarchy of needs framework through households’ views for their ability to meet current living expenses in the short-term as well as their saving decisions for their retirements in the long-term. Findings show that households’ daily concerns including inability to meet short-term expenses including healthcare, daily living expenses (food and utilities), and inability to maintain the existing life standard are highly significant factors in explaining their financial well-being. Moving to the next stage in Maslow’s hierarchy of needs, we find that having enough income during the retirement and ability to find a job in the future when needed are positively related to financial well-being. When households’ income is from work, rental properties, family, and retirement, they feel financially more secure. We find that households with high inheritance income expectations or income from private pension at the retirement tend to save less. Finally, when the number of people in the family providing family income is more than two persons, they tend to save less.

Institutional Herding and Mood

Drawing on a unique data set of daily portfolio holdings for Turkish mutual funds we investigate the relationship between mood and institutional herding on the premises of various established mood proxies (weekend effect; holiday effect; Ramadan; sunshine; new/full moon) for the January 2002 – August 2008 period. Results indicate that fund managers in Turkey herd significantly, with their herding growing in magnitude as the number of active funds per stock rises and appearing stronger on the buythan the sell-side. Although the relationship of mood with institutional herding occasionally assumes the correct sign as per theoretical expectations, institutional herding is found to be insignificantly different across various mood states, thus denoting that mood does not impact the propensity of fund

Choice of Finance in an Emerging Market: The Impact of Independent Decisions, Politics and Religion

This paper is based on a KONDA 1 Research and Consultancy 2 survey conducted in May 2014 on 2607 people forming a representative sample of the Turkish population. It focuses on how people’s religious and political characteristics impact the independence of their decision making regarding saving and borrowing. An earlier study by Davutyan and Ozturkkal (2016) reports saving and borrowing decisions strongly correlate with income, education, marital status and region within country. Furthermore, 54% of those surveyed did not save and the main motivation for those who saved was to finance children’s education or home purchase. Religious people and those with a conservative lifestyle are less likely to borrow from family and friends. Older, married and working individuals are more likely to have difficulty paying back loans. According to the results of this survey, religious individuals are less likely to independently decide on their investment choices. Thus, religious people tend to make investment decisions together with family, elderly and respected relatives.

The Relationship Between Firm Size and Export Sales: Sector or Size, What Matters?

This paper examines the performance of export focused companies listed on the Borsa Istanbul trading in the emerging market of Turkey. Using the panel data of stock market prices (1995–2011), we study the performance of companies in different sectors and their return performance in the volatile exchange rate environment and devaluation periods of 1996, 1997, 1998, 1999, 2001 and 2008. The paper investigates sales, market capitalization or asset performances’ statistical significance level, with regard to these companies’ export level. We review the performance of these operational measures in an environment of changing foreign exchange rates. Regression analysis is used to measure the effects of currency devaluation on the companies analyzed. Finally, the study analyzes the export sales of companies by sector following a period of sharp devaluation.

An Analysis and Risk Modeling on Mortgage Payment Defaults in an Emerging Market

This paper presents an analysis and default risk modeling on the non-performing loans of an emerging mortgage market. The analysis and the model, unprecedented for the market under study, utilize a large data set over several years with twenty-six variables that are contained in almost a hundred thousand records about the mortgage loan borrowers. The descriptive part of the analyses shows a statistical summary of all the available information on loans, defaults and loss exposures. The structure of the relation between the loan defaults and the borrower features is analyzed in detail with regression and logistic regression models. The exact and explicit probability distributions are derived for the default counts. Then, a compound Binomial distribution model is presented for the loss amounts arising from default events. Upon the obtained probability distributions, policy implications are discussed for the default risk management purposes.

Portfolio Risk Choices of Finance Sector Professionals in Turkey

Asset markets in emerging markets exhibit high volatility and low liquidity. Under such circumstances, individual portfolio and trading choices become difficult. Among emerging markets, Turkey in particular has high turnover, even when compared to developed markets, and this makes it an appealing case to study the risk choices of finance sector professionals. This paper analyzes the determinants of risk choices and preferences of employees of a brokerage company and portfolio managers in this market for their own investments. We use a unique data set from a survey of 206 finance sector professionals in 2012. Specifically, we found that financial literacy, work experience, education, and confidence are positively related with wealth, and trading frequency, education, and low age tend to increase the allocation of equities in portfolio.

A tournament analysis of mutual funds in Turkey

This is an analysis of the mutual funds in Turkey with respect to their risk-altering behavior. Using the monthly returns and volatilities of 133 funds from 2002 to 2007, we divide each year in two parts and check whether or not the funds’ performance in the first part affects the behavior of mutual fund companies in the second part in terms of risk. We find sufficient evidence that the funds which have lower/higher performance in the first part of the year have higher/lower risk appetite for the second half of the year. The results have stronger significance if the year is divided from June or July. The results from the Turkish mutual funds market are generally in line with previous literature from developed countries.