Abstract:

It is a well-known fact that foreign investment is very important for emerging economies. It is known that the capital flows provided to the countries have a positive contribution to the development countries, the decrease of the current account deficits, the increase of investments and accordingly the decrease of their employment. The purpose of this study is to analyze the relationship between foreign portfolio investment inflows and stock market and macroeconomic factors. In this study, the autoregressive model (VAR) was used with quarterly data covering 2006: Q1 - 2016: Q4 years. According to the results of this study, it was seen that the reaction from foreign portfolio investments (DFPI) to Istanbul Stock Exchange (DSTE), interest rate (DINT) and foreign exchange rate (DEXC). On the other hand, the existence of a response to foreign portfolio investments (DFPI) has also been determined from the exchange rate (DEXC). In the variance analysis, it is determined that the changes in foreign portfolio investments (DFPI) are explained by exchange rate (DEXC), Istanbul Stock Exchange (BSTE) and interest rate (DINT). 

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