The Effects of Corporate Conversion on Development of Stock Exchanges: An Analysis toward Conversion of Turkish Exchanges to Borsa İstanbul
The Progress of Financial Markets in Balkan Countries, Theory and Practice, Shiks Publishing & Library (2018); ISBN: 978-9951-8974-0-2
31 Pages Posted: 17 Dec 2018
Date Written: August 15, 2018
Although banking sectors have the highest share in the financial system in old times, the figure has been changing. Capital markets have been increasing their share and role in financial systems and capital markets are the key player in funding economic activities for many countries nowadays. The figure is not also different for Turkey.
When looking at the structure of capital markets in Turkey, it can be seen that there was a fragmented exchange structure which means that there were 3 separated exchanges consisting of İstanbul Stock Exchange (ISE), Future and Options Exchange (FOE), and İstanbul Gold Exchange (IGE). In 2013, ISE and IGE were united and converted to Borsa İstanbul (BIST) and FOE was acquired BIST.
It is known commonly that existence of one exchange in one country is important in terms of development and growth. So, within the context of conversion of Turkish Exchanges to BIST, this study aims to evaluate the effects of corporate conversion on the development of exchanges. In this context, data of the exchange is examined by descriptive statistics and hence conversion effect is analyzed.
It is determined that conversion of exchanges to BIST made a positive effect on market cap, trade volume, BIST 100 and BIST 30 indices, and financial figures consisting of total assets, total equity, and net income on TL basis. However, the situation is different for mentioned indicators on United States of America Dollar (USD) basis due to increasing USD/TL currency rate in recent years in Turkey. In addition, it is defined that conversion does not make an important effect on the number of publicly traded companies.
Also, it is an important point to be stated that in order to sustain growth trend, the establishment of any special exchanges except for complimentary to BIST which will become a rival to BIST in Turkey should not be allowed. Otherwise, this would affect development trend of BIST. In order to accelerate and sustain growth in figures of BIST, it may be appropriate that BIST and Capital Markets Board and other regulatory authorities should take actions if necessary.
Keywords: BIST, Growth, Progress, Turkey, Turkish Capital Markets
JEL Classification: G19, G29, N25, O16
Suggested Citation: Suggested Citation