IMPACT OF CLIMATE CHANGE ON BIST 30 INDEX USING VAR MODEL

Year 2022, Volume: 9 Issue: 4, 187 - 196, 31.12.2022

Muhammad Muddasır

Abstract

Purpose- Global warming has caused an increase in the frequency and severity of extreme weather events in many parts of the world, including Turkey, over the past several decades. This study examines the effects of weather disasters on the Borsa Istanbul stock market from 2009 to 2019 using the BIST 30 Index.
Methodology- In the study, the short–term relationship between the Borsa Istanbul Stock Exchange (BIST30) index and climate change for the period January 2009 – December 2019 was analyzed using the VAR model, and Granger causality test, effect-response test and variance Decoupling tests were applied, respectively. In climate change we take 2 variable which are temperature and precipitation.
Findings – The impact of weather-related calamities on stock market volatility and returns has been found to be insignificant. BIST30 index has no effect of climate change and vice versa. A one-way relationship found between Temperature and the precipitation, and a short-term positive effect-response was found between these variables.
Conclusion – In conclusion we can say that climate change is one of the harsh reality which starts in recent years, and we can’t ignore it. It has been determined that the BIST 30 index has not been impacted by climate change in Turkey. which mean 30 best performance companies but maybe it affects small companies and big stock exchanges like Nasdaq, FTSE, and others.

Keywords

Climate change, BIST-30, VAR model, precipitation, extreme weather temperatures

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