Armagan Gezici

Liquidity, Uncertainty and Investment: Financial Liberalization in the Turkish Economy Armagan Gezici

Financial crises of the last two decades raised doubts about the potential benefits from liberalization policies for emerging markets. As liberalized economies became exposed to the whims of international capital flows, new opportunities for disruptive speculative financial activity emerged, leading to heightened systemic instability, with implications for private non-financial investment. This book analyzes the consequences of financial liberalization on the investment decisions of private manufacturing firms in the Turkish economy. Changing conditions of liquidity and uncertainty in the post liberalization Turkish economy are analyzed as the main channels through which liberalization policies affected investment decisions. Based on the results of interviews with company managers and econometric analysis, this work argues that the negative impact of volatility on investment in a highly uncertain macroeconomic environment is intensified through its effect on the state of confidence of managers. The book is a contribution to the literatures on the economics of developing countries, investment theories and liberalization policies.