The Effect of Military Expenditures on Stock Exchange Indices: A Research on G8 Countries and Turkey

Öz

Aim: The aim of this study is to analyze the impact of military expenditures on stock market indices. In this context, the study seeks to determine the effect of military expenditures on equity markets using a sample comprising G8 countries (United States, Russia, the United Kingdom, Germany, France, Japan, Italy, and Canada) and Turkey. Method: In the study, panel data analysis was conducted using a dataset covering the period from 2006 to 2022. The stock market index was used as the dependent variable, while the independent variables included military expenditures, energy consumption, portfolio investments, inflation, and GDP. Results: The analysis results indicate a positive and statistically significant relationship between military expenditures and stock market indices in the model constructed for the G8 countries and Turkey. An increase in military expenditures generally has a favorable impact on equity markets. However, when assessed on a country-specific basis, a statistically significant negative effect was identified for the United States and Turkey, while a statistically significant positive effect was observed for Italy. Conclusion: The findings support the impact of military expenditures on financial markets. While the overall model reveals a positive and statistically significant effect of military expenditures on stock market indices, country-specific variations have been observed. An increase in military expenditures was found to have a negative impact on stock market indices in the United States and Turkey, whereas a positive and statistically significant effect was identified for Italy. These differences can be attributed to factors such as the economic structures of the countries, investor perceptions, and geopolitical risk factors.

Anahtar Kelimeler

• Military Expenditure
• Stock Exchange
• Index
• G8
• Turkey

Askeri Harcamaların Borsa Endeksleri Üzerine Etkisi: G8 Ülkeleri ve Türkiye Üzerine Bir Araştırma

Öz

Amaç: Bu çalışmanın amacı, askeri harcamaların borsa endeksleri üzerindeki etkisini analiz etmektir. Bu kapsamda G8 ülkeleri (Amerika Birleşik Devletleri, Rusya, İngiltere, Almanya, Fransa, Japonya, İtalya ve Kanada) ve Türkiye örnekleminde, askeri harcamaların hisse senedi piyasalarına olan etkisinin tespit edilmesi hedeflenmiştir. Yöntem: Çalışmada 2006-2022 yıllarını kapsayan veri seti dikkate alınarak panel veri analizi gerçekleştirilmiştir. Bağımlı değişken olarak borsa endeksi yer alınırken, bağımsız değişkenler arasında askeri harcamalar, enerji tüketimi, portföy yatırımları, enflasyon ve GSYİH yer almaktadır. Bulgular: Analiz sonuçları, G8 ülkeleri ve Türkiye için oluşturulan modelde askeri harcamalar ile borsa endeksleri arasında pozitif ve istatistiksel olarak anlamlı bir ilişki olduğunu göstermektedir. Askeri harcamalardaki artış, genel olarak hisse senedi piyasalarında olumlu bir etki yaratmaktadır. Ancak ülke bazında değerlendirme yapıldığında, Amerika Birleşik Devletleri ile Türkiye için negatif etkinin ve İtalya için pozitif etkinin istatistiksel olarak anlamlı olduğu tespit edilmiştir. Sonuç: Elde edilen bulgular, askeri harcamaların finansal piyasalar üzerindeki etkisini destekler niteliktedir. Genel modelde askeri harcamaların borsa endeksleri üzerinde pozitif ve istatistiksel olarak anlamlı bir etkisi bulunmasına rağmen, ülke bazında farklılıklar gözlemlenmiştir. Amerika Birleşik Devletleri ve Türkiye için askeri harcamalardaki artışın borsa endeksleri üzerinde negatif bir etkisi olduğu tespit edilirken, İtalya için bu etkinin pozitif ve istatistiksel olarak anlamlı olduğu belirlenmiştir. Bu farklılıklar, ülkelerin ekonomik yapıları, yatırımcı algıları ve jeopolitik risk faktörleri ile açıklanabilir.

Anahtar Kelimeler

• Askeri Harcama
• Borsa
• Endeks
• G8
• Türkiye

Kaynakça

1. ABDELFATTAH, Y. M., ABU-QARN, A. S., DUNNE, J. P., & ZAHER, S. (2014). The demand for military spending in Egypt. Defence and Peace Economics, 25(3), 231-245. doi: 10.1080/10242694.2013.763454
2. AKLAN, N. A., AKAY, H. K., & ÇINAR, M. (2014). Türkiye’de para politikalarının bankaların risk yüklenimleri üzerindeki etkileri. Uluslararası Yönetim İktisat ve İşletme Dergisi, 10(21), 1-17. https://doi.org/10.11122/ijmeb.2014.10.21.476
3. ALEXANDER, W. R. J. (2013). Military spending and economic growth in South Asia: comment and reconsideration. Defence and Peace Economics, 24(2), 173-178. doi: 10.1080/10242694.2012.679832
4. ALİ, H. E. (2012). Military expenditures and inequality in the Middle East and North Africa: a panel analysis. Defence and Peace Economics, 23(6), 575-589. doi: 10.1080/10242694.2012.663578
5. ANDREEV, V. O., TINYAKOV, S. E., PARAHIN, G. P., & OVCHINNIKOVA, O. P. (2009). An application of EVT, GPD and POT methods in the russian stock market (RTS index). GPD and POT Methods in the Russian Stock Market (RTS Index)(November 17, 2009). doi: 10.2139/ssrn.1507678
6. ANTONIOU, A., & HOLMES, P. (1995). Futures trading, information and spot price volatility: Evidence for the FTSE-100 stock index futures contract using GARCH. Journal of Banking & Finance, 19(1), 117-129. doi: 10.1016/0378-4266(94)00059-C
7. BODIE, Z. (1976). Common stocks as a hedge against inflation. The Journal of Finance, 31(2), 459-470. doi: 10.2307/2326617
8. BORA, Ö. (2023). Türkiye ve G8 ülkelerinin deniz ticaret filoları ve limanlarının karşılaştırılması. Yalvaç Akademi Dergisi, 8(1), 20-30. doi: 10.57120/yalvac.1219632

9. BOUZGUENDA, M., & JARBOUI, A. (2024). Quantile connectivity between cryptocurrency, commodities, gold and BRICS index: what is the best investment strategy?. Eurasian Economic Review, 1-37. doi: 10.1007/s40822-024-00290-y
10. BROWN, M.B. and Forsythe, A.B. (1974) The small sample behavior of some statistics which test the equality of several means. Technometrics, 16, 129-132. doi: 10.1080/00401706.1974.10489158.
11. BÜHLER, W., & KEMPF, A. (1995). DAX INDEX FUTURES: MISPRICING AND ARBITRAGE IN GERMAN MARKETS. Journal of Futures Markets, 15(7). doi: 10.1002/fut.3990150706
12. CAPELLE-BLANCARD, G., & CHAUDHURY, M. (2001). Efficiency tests of the French index (CAC 40) options market, 1-53. doi: 10.2139/ssrn.283695
13. CAPPELEN, Å., GLEDITSCH, N. P., & BJERKHOLT, O. (1984). Military spending and economic growth in the OECD countries. Journal of Peace Research, 21(4), 361-373. doi: 10.1177/002234338402100404
14. ÇINAR, M., & YILMAZ, A. (2017). Terör olaylarının döviz piyasası oynaklığı üzerindeki etkisi: Türkiye örneği. International Journal of Academic Value Studies, 3(13), 55-66. doi: http://dx.doi.org/10.23929/javs.351
15. DESTEK, M. A. (2016). NATO ülkelerinde askeri harcamalar ve ekonomik büyüme ilişkisi: yatay kesit bağımlılığı altında panel veri analizi. Uluslararası Yönetim İktisat ve İşletme Dergisi, 12(28), 209-223. doi: 10.17130/ijmeb.20162819853
16. DIPIETRO, W. R., ANORUO, E., & SAWHNEY, B. (2008). The effect of the size of the military on stock market performance in the United States and the UK. Kyklos, 61(1), 33-44, doi: 10.1111/j.1467-6435.2008.00391.x.
17. DİNÇERGÖK, B. (2015). Yatırım, kaldıraç ve büyüme fırsatları: BIST imalat sektörü firmalarında bir uygulama. Muhasebe ve Finansman Dergisi, (68), 83-98. doi: 10.25095/mufad.396626
18. DİŞKAYA, F., EMİR, S., & ORHAN, N. (2011). Measuring the technical efficiency of telecommunication sector within global crisis: comparison of G8 countries and Turkey. Procedia-Social and Behavioral Sciences, 24, 206-218. doi: 10.1016/j.sbspro.2011.09.037
19. DRISCOLL, J. C., & KRAAY, A. C. (1998). Consistent covariance matrix estimation with spatially dependent panel data. Review of Economics and Statistics, 80(4), 549-560. doi: 10.1162/003465398557825
20. DUNNE, J. P., NIKOLAIDOU, E., & Chiminya, A. (2019). Military spending, conflict and external debt in Sub-Saharan Africa. Defence and Peace Economics, 30(4), 462-473. doi: 10.1080/10242694.2018.1556996
21. DUNNE, P., & WATSON, D. (2000). Military expenditure and employment in South Africa. Defence and peace economics, 11(4), 587-596. doi: 10.1080/10430710008404968
22. ELNAHASS, M., JIA, X., & CRAWFORD, L. (2024). Disruptive technology and audit risks: Evidence from FTSE 100 companies. Emerging Markets Review, 101218. doi: 10.1016/j.ememar.2024.101218
23. ERSOY, E., & ÜNLÜ, U. (2013). Energy consumption and stock market relationship: evidence from Turkey. International Journal of Energy Economics and Policy, 3(4), 34-40. https://dergipark.org.tr/en/download/article-file/361260
24. EYLASOV, N., ŞAHİNLER, A. N., KILIÇ, R., GASİM, N. (2024). BRICS+T ülkelerinde finansal gelişme ve askeri harcamaların GSYİH üzerindeki etkisi: Fourier Bootstrap ARDL yaklaşımı. Journal of Management and Economics, 31(3), 543-572. doi: 10.18657/yonveek.1270661
25. FAMA, E. F. (1981). Stock returns, real activity, inflation, and money. American Economic Review. https://www.jstor.org/stable/1806180
26. FAMA, E. F., & SCHWERT, G. W. (1977). Asset returns and inflation. Journal of Financial Economics, 5(2), 115-146. doi: 10.1016/0304-405X(77)90014-9
27. FARZANEGAN, M. R. (2014). Military spending and economic growth: the case of Iran. Defence and Peace Economics, 25(3), 247-269. doi: 10.1080/10242694.2012.723160
28. FRINO, A., & GALLAGHER, D. (2001). Tracking S&P 500 index funds. Journal of portfolio Management, 28(1). doi: 10.3905/jpm.2001.319822
29. GREENWOOD, R. (2008). Excess comovement of stock returns: Evidence from cross-sectional variation in Nikkei 225 weights. The review of financial studies, 21(3), 1153-1186. doi: 10.1093/rfs/hhm052
30. GUJARATİ, D.N. ve PORTER, D.C. (2009). Basic econometrics (Fifth Edition). New York, USA: McGraw-Hill Irwin.
31. HAIDER, M. A., KHAN, M. A., SADDIQUE, S., & HASHMI, S. H. (2017). The impact of stock market performance on foreign portfolio investment in China. International journal of economics and financial issues, 7(2), 460-468. https://www.econjournals.com/index.php/ijefi/article/view/3979
32. HARADA, K., & OKIMOTO, T. (2021). The BOJ's ETF purchases and its effects on Nikkei 225 stocks. International Review of Financial Analysis, 77, 101826. doi: 10.1016/j.irfa.2021.101826
33. HAUSMAN, J.A. (1978). Specification tests in econometrics. Econometrica, 46(6), 1251-1271. doi: 10.2307/1913827
34. HEO, U. (1996). The political economy of defense spending in South Korea. Journal of Peace Research, 33(4), 483-490. doi: 10.1177/0022343396033004008
35. HOU, N., & CHEN, B. (2013). Military expenditure and economic growth in developing countries: Evidence from system GMM estimates. Defence and peace economics, 24(3), 183-193. doi: 10.1080/10242694.2012.710813 https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?end=2022&most_recent_value_desc=true&start=1960
36. KARAGÖL, E. (2005). Defence expenditures and external debt in Turkey. Defence and Peace Economics, 16(2), 117-125. doi: 10.1080/10242690500070045
37. KAWALLER, I. G., KOCH, P. D., & KOCH, T. W. (1987). The temporal price relationship between S&P 500 futures and the S&P 500 index. The Journal of Finance, 42(5), 1309-1329. doi: 10.2307/2328529
38. KLEINBAUM, D., KUPPER, L. L. ve MULLER, K. E. (1998). Applied Regression Analysis and Other Multivariable Methods (2nd Edition). Belmont, CA: Wadsworth Publishing Company.
39. KOLLAS, C., KYRTSOU, C., & PAPADAMOU, S. (2013). The effects of terrorism and war on the oil price–stock index relationship. Energy Economics, 40, 743-752. doi: 10.1016/j.eneco.2013.09.006
40. KONAK, F., & DUMAN, D. (2019). Terör Saldırılarının Finansal Piyasalara Etkisi: Borsa İstanbul 100 Endeksi Üzerine Bir Uygulama 1. Third Sector Social Economic Review, 54(2), 874-896. doi: 10.15659/3.sektor-sosyal-ekonomi.19.04.1048
41. KORKMAZ, Ö., ERER, D., & ERER, E. (2017). Terör olaylarının finansal piyasalar üzerine etkisi. Sosyoekonomi, 25(1). doi: 10.17233/sosyoekonomi.281942
42. LEE, C. T. (2022). Military Spending and Employment. Defence and Peace Economics, 33(4), 501-510. doi: 10.1080/10242694.2021.1873660
43. LEVENE, H. (1960) Robust Tests for Equality of Variances. In: Olkin, I., Ed., Contributions to Probability and Statistics, Stanford University Press, Palo Alto, 278-292.
44. LEVIN, A., C.-F. Lin, and C.-S. J. Chu (2002). Unit root tests in panel data: asymptotic and finite-sample properties. Journal of Econometrics. 108: 1–24. doi: 10.1016/S0304-4076(01)00098-7.
45. LINTNER, J. (1975). Inflation and security returns. The Journal of Finance, 30(2), 259-280. doi: 10.1111/j.1540-6261.1975.tb01809.x
46. LOONEY, R. E. (1998). Defense expenditures and macroeconomic stabilization in pakistan: a test of the military keynesianism hypothesis. Rivista Internazionale di Scienze Economiche e Commerciali, 45, 599-614. https://hdl.handle.net/10945/40642
47. MERBECKS, U. (2024). Corporate digital responsibility (CDR) in Germany: Background and first empirical evidence from DAX 30 companies in 2020. Journal of Business Economics, 94(7), 1025-1049. doi: 10.1007/s11573-023-01148-6
48. OTUTEYE, E., & SIDDIQUEE, M. (2013). Examining the performance of a value ınvesting heuristic: evidence from the S&P/TSX 60 from 2001-2011. Journal of Business Economics and Finance, 2(4), 67-81. https://dergipark.org.tr/en/pub/jbef/issue/32413/360480
49. PAN, Z. (2014). Modelling tail dependence between energy market and stock markets in the BRIC countries. Applied Economics Letters, 21(11), 789-794. doi: 10.1080/13504851.2014.892188
50. PESARAN, M. H. (2004). General diagnostic tests for cross section dependence in panels. Available at SSRN: https://ssrn.com/abstract=572504 or doi: 10.2139/ssrn.572504.
51. POLLIN, R., & GARRETT-PELTIER, H. (2009). The U.S. employment effects of military and domestic spending priorities. International Journal of Health Services, 39(3), 443-460. https://www.jstor.org/stable/45131150
52. RAIFU, I. A., & AMINU, A. (2023). The effect of military spending on economic growth in MENA: evidence from method of moments quantile regression. Future Business Journal, 9(1), 7. doi: 10.1186/s43093-023-00181-9
53. RICCIONI, J., & CERQUETI, R. (2018). Regular paths in financial markets: Investigating the Benford’s law. Chaos, Solitons & Fractals, 107, 186-194. doi: 10.1016/j.chaos.2018.01.008
54. SHAHBAZ, M., SHABBIR, M. S., & Butt, M. S. (2016). Does military spending explode external debt in Pakistan?. Defence and Peace Economics, 27(5), 718-741. doi: 10.1080/10242694.2012.724878
55. SMYTH, R., & KUMAR NARAYAN, P. (2009). A panel data analysis of the military expenditure-external debt nexus: Evidence from six Middle Eastern countries. Journal of peace research, 46(2), 235-250. https://www.jstor.org/stable/25654382
56. SOLARIN, S. A., & SAHU, P. K. (2015). The effect of military expenditure on stock market development: panel evidence from system GMM estimates. Defence and Peace Economics, 26(3), 271-287. doi: 10.1080/10242694.2014.898384.
57. SOUISSI, N. (2017). The implied risk neutral density dynamics: Evidence from the S&P TSX 60 index. Journal of Applied Mathematics, 2017(1), 3156250. doi: 10.1155/2017/3156250
58. ŞAK, N. (2018) Uygulamalı panel veri ekonometrisi, panel birim kök testleri, Ed. S. Güriş, Der Kitabevi, İstanbul.
59. TASKINSOY, J. (2019). The global competitiveness index: a comparative analysis between TURKEY and G8 nations. Available at SSRN 3500542. Doi: 10.2139/ssrn.3500542TATOĞLU, F.Y. (2018). Panel veri ekonometrisi: stata uygulamalı. Beta Basım Yayım Dağıtım, 4. Baskı. İstanbul.
60. TEKİN, B., & YENER, E. (2018). BRICS ve G7 ülkeleri ile türkiye’de hisse senetleri piyasaları ve ekonomik büyüme arasındaki nedensellik ve eşbütünleşme ilişkilerinin karşılaştırmalı analizi. Ankara Hacı Bayram Veli Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 20(3), 535-559. https://dergipark.org.tr/en/download/article-file/636607
61. TELEK, C., ŞİT, A., & DANACI, M. (2020). Yabancı portföy yatırımlarının borsa üzerine etkisi: Türkiye örneği. Kilis 7 Aralık Üniversitesi Sosyal Bilimler Dergisi, 10(19), 164-178. doi: 10.31834/kilissbd.717388
62. TELLİ, R., & SERİN, Z. V. (2023). A comparative analysis on healthcare spending efficiency among the G-8 countries and Turkey. Journal of Economic Policy Researches, 10(1), 281-302. doi: 10.26650/JEPR1227842
63. THE MINING ASSOCIATION OF CANADA (2023). The Canadian Mining Story: Economic Impacts and Drivers for the Global Energy Transition. https://mining.ca/resources/reports/mac-report-2023/
64. TOPAL, M. H. (2018). Türkiye’de askeri harcamalar ile ekonomik büyüme arasındaki ilişkinin bir analizi (1960-2016). Maliye Dergisi, 174, 175-202. https://ms.hmb.gov.tr/uploads/2019/09/174-09.pdf?csrt=7478947963233924102
65. ULLAH, A., Zhao, X., KAMAL, M. A., & ZHENG, J. (2020). Modeling the relationship between military spending and stock market development (a) symmetrically in China: An empirical analysis via the NARDL approach. Physica A, Statistial Mechanics and its Applications, 554, 124106. doi: 10.1016/j.physa.2019.124106
66. ÜNLÜ, K. D., POTAS, N., & YILMAZ, M. (2020). Relationships between stock markets: causality between G8 countries and Turkey. In Chaos, Complexity and Leadership 2018: Explorations of Chaotic and Complexity Theory 6 (pp. 67-76). Springer International Publishing.
67. ÜNSAL, M. E. (2020). G7 ülkelerinde askeri harcamalar ve ekonomik büyüme: Panel veri analizi. The Journal of Social Science, 4(7), 25-33. doi: 10.30520/tjsosci.650851
68. VIJH, A. M. (1994). S&P 500 trading strategies and stock betas. The Review of Financial Studies, 7(1), 215-251. https://www.jstor.org/stable/2962291
69. WING, M. M. (1991). Defence spending and employment in Indonesia. Defence and Peace Economics, 3(1), 83-92. doi: 10.1080/10430719108404716
70. YAKOVLEV, P. (2007). Arms trade, military spending, and economic growth. Defence and peace economics, 18(4), 317-338. doi: 10.1080/10242690601099679
71. YÜRÜK, M. F. (2022). Rusya-Ukrayna Savaşının Borsa İstanbul BİST 100 Endeksine Etkisinin Olay Çalışması ile Analizi. Turkish Studies-Economics, Finance, Politics, 17(3). doi: 10.7827/TurkishStudies.62043