An Empirical Analysis of Impact of Central Bank Policy Interest Rate on the Decisions of Share Investors: Evidence from Turkey

The purpose of this study is to analyse the impact of policy interest rate decisions of the Central Bank on investment decisions of share investors who make investment within Istanbul Stock Exchange Market (ISE) in Turkey whether the ISE is an efficient market as of the monetary policy. These analyses were carried out by data composed of 88 observations covering 2002-2010 period. Two variables are used in the scope of the analysis. The first variable is the policy interest rate applied by the Central Bank. And the second variable is the ISE National 100 index. Two separate impulse-response analyses were applied within the scope of the analysis.According to findings of both of the analyses which are obtained as a result of the study, it is seen that investors to not react to interest shock in the short term.