Emerging stock markets have recently been of great importance to the worldwide investment community. According to the International Finance Corporation (IFC), a subsidiary of the World Bank, all markets in developing countries are treated as emerging.
The World Bank defines developing countries to have per capita GNP below 7,620 U.S. dollars in 1990 prices. Under these definitions, the Istanbul Securities Exchange (ISE) is an emerging market of a developing country namely Turkey.
ISE has continued to operate since January 1986. Number of companies whose stocks have been traded increased from 42 in January 1986 to 176 by the end of 1994. Total market capitalization was US $ 938 million at the end of 1986. It increased to US $ 21.8 billion by the end of 1994. The highest capitalization, US $ 37.8 billion, was observed in December 1993. In 1994, total trading volume was US $ 23.2 billion. For the period 1986-94, average price-earnings (P/E) ratio was 12.4. Average dividend payout (DIV) ratio was 6.5% for the same period. Table 1 gives further descriptive details concerning the ISE.
There has been an increase in empirical and policy-oriented studies concerning emerging stock markets. A partial list of these studies includes Claessens and Gooptu (1993), Cornelius (1993), Keane (1993), Mullin (1993), Claessens and Rhee (1994), Errunza (1994), Hauser et. al. (1994). In addition, one can find many studies on emerging markets using individual country data. However, there is little work with special reference to the Turkish stock market in international literature.
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