Özet:

This study investigates causality between financial stability and foreign direct investment inflows. Firstly, a composite financial stability index is constructed for the economy of Turkey between 2007-Q2 and 2015-Q4. The composite financial stability index is composed of thirty four indicators of financial development, financial vulnerability, financial soundness, financial elasticity, macroeconomic elasticity and global risk indexes. After composing an aggregate financial stability index, the relation between this index and foreign direct investment inflows is analysed by Granger Causality Test. Uni-directional causality from foreign direct investment inflows to financial stability is found.

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