Effects of the US Trade Policy Uncertainty on the Turkish Financial Markets and Bank Loans

For many decades, the transmission of uncertainty among countries has been one of the hottest topics in the literature. This study aims to contribute to this literature by studying the impact of the U.S.'s trade policy uncertainty (TPU) on the Turkish stock market, bank loans, and investor sentiment. We employ a non-linear autoregressive distributed lag (NARDL) approach. An existing cointegration between variables is demonstrated. Our findings also show that while the U.S.'s TPU significantly influences both share prices and bank loans, it does not seem to substantially impact Turkey's investor sentiment in the long run or the short run. This paper demonstrates that the effects of U.S. policies on financial market players and investors in Turkey are not negligible.