Analysis of the Effects of the Central Bank’s Interest Announcements on Tourism Index Returns

Abstract

This paper examines the impact of interest rate announcements by the Central Bank of the Republic of Turkey (CBRT) on Borsa İstanbul tourism index returns. During the period covering 2010-2020, the effects of the CBRT's 20 decrease announcements and eight increase announcements on tourism index daily returns were examined separately using the event study method. Moreover, the BIST100 index was analysed for comparison purposes. According to the study results in which ARs were calculated with the mean adjusted return model, out of 20 announcements of decreases in the interest rate, only 3 showed statistically significant ARs on the event date. This result indicates that tourism investors’ reactions to policy rate announcements are weak and suggests the policy rate does not affect tourism investors' reactions. The findings for the BIST100 support this idea.