The Impact of Political Elections on Financial Markets as Political Risk Factor: A Case Study of the 2023 Turkey Presidential Elections

Abstract

The aim of the study is to analyze the impact of the 2023 Presidential elections on the BIST-30 index using the event study methodology. When evaluating the findings regarding the impact of the 2023 Presidential elections held in Turkey on the stock returns of companies traded in the BIST-30 index, in the 1st round election is a negative abnormal return while the 2nd round election has a positive abnormal return. According to the research findings, while investors' expectations during the election process were towards the continuation of market stability, the elections proceeding to the 2nd round led to a negative reaction contrary to those expectations. In the second round, the election outcome, which aligned with market expectations, is met with a positive abnormal return in the market. The absence of a study conducted on the 2023 political elections is the originality of the research and its contribution to the literature.