D53 - General Equilibrium and Disequilibrium: Financial MarketsReturn

This study investigates the impact of terrorism on financial markets, focusing specifically on Turkey's sovereign Credit Default Swap (CDS) premiums from 2011 to 2017 - period characterized by frequent and diverse terrorist activities. Employing an EGARCH model with dummy variables for various terrorist groups, we analyze immediate and short-term market reactions across different event windows. Our findings reveal significant volatility in CDS premiums following terrorist incidents, with market responses varying depending on the terrorist group perpetrating the incident. This study enhances the understanding of capital market reactions on terrorist events through CDS instruments, highlighting their role in assessing sovereign credit and country risk.

European emerging and transition economies are in immense need of investments and renewal of capital, yet they produce a considerable amount of unutilized resources. In particular, banks hold excess liquidity in the face of seemingly profitable lending opportunities. Is it a demand-side or supply-side problem or is this region entirely different and have we been working under the wrong paradigm? This study creates a new estimate of excess liquidity by taking into account banks' overall liquidity position. Breaking down precautionary from involuntary excess liquidity, a significant presence of the latter is evident. A part of the story deals with insensitivity of deposits to interest rates. Based on our standard understanding of how banks work, this is puzzling and this study creates a new way to look at this. Using new measures is the way to launch the investigation of causes and policy implications for involuntary excess liquidity.

The trend of cryptocurrencies has stirred interest in the underlying technology that qualifies cryptocurrencies as a secure structure with speedy, timely and cheap transactions. The aforementioned technology, the blockchain, in brief terms is a decentralized ledger technology that attains an immutable characteristic through consensus and timestamp mechanics. The model also sets the stage for transparency in transactions, which renders the technology applicable to a myriad of scenarios that involve financial instruments. This research puts forth an argumentative approach to the applicability of blockchain technology and specifically studies the prospect of utilizing smart contracts. This approach probes the feasibility of introducing smart contracts to everyday financial transactions and settlements. An opposing perspective, by taking a devil's advocate standpoint, invokes the impractical or implausible aspects of implementing the blockchain in certain scenarios. Difficulty in auditing is a prominent example among those impracticalities. Research methodology is qualitative in nature and takes the form of exploratory research by examining existing literature on the topic.