M.A. Theses

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Income diversification and performance of commercial banks in Türkiye
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2023., 2023) Er, Tarık Alperen.; Kuzubaş, Tolga Umut.
This thesis examines the impact of income diversification on bank performance by using the quarterly data of commercial banks from a large developing economy, Türkiye. The results show that diversification towards non-interest income generating activities improves bank profitability. Moreover, this improvement in bank profitability does not arise with the cost of higher risk. In other words, the higher degree of income diversification does not harm the risk-return trade-off (risk- adjusted profitability) because the gains in profitability offset the increase in earnings volatility. The results are also robust to the choice of the sample period, to the choice of explanatory variables, and to the examination of risk-return trade-off with a shorter-term risk perspective. Considering that Turkish commercial banks have a relatively lower share of non-interest income, this study underscores an implication for bank management and regulators that there can be still untapped potential for banks to be exploited through the diversification of income generating activities.
The effect of US States’ environmental policies on their own carbon emissions
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2023., 2023) Kennedy, Colby.; Özkaynak, Begüm.
Reducing carbon emissions has been a longstanding goal of policy makers, who have implemented a variety of taxes, incentives, and mandates to achieve emissions reductions in line with their own goals as well as international climate agreements. In the United States, both command-and-control policies and market- based policies have been implemented in different combinations and with different design choices under different circumstances. Understanding the effect of these policies individually as well as the benefits of each approach generally is critical for states to design and implement effective climate policies. This thesis studies the effect of three of these policies; carbon markets, environmental review, and renewable portfolio standards together in order to both compare the effects of each policy as well as to better separate the effects of each policy from the total effect of all policies in the context of the United States. We find that carbon market schemes in the US are effective in accelerating the transition to a low carbon economy, while renewable portfolio standards and environmental review policies are not effective or may even be impairing the transition to a low carbon economy.
Multidimensional poverty in forced displacement : a comparison of Syrian and native households in Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2023., 2023) Kılıç, Tuğçe.; Kırdar, Murat G.
This study addresses the limitations of traditional measures of poverty that focus solely on income or consumption expenditure and instead adopts a multidimensional approach inspired by Amartya Sen's capabilities perspective. Combining various statistical approaches with normative considerations, a multidimensional poverty index (MPI) is constructed for Syrian refugees in Turkey, a context that has received relatively less attention in the literature compared to other host countries. Using the Turkey Demographic and Health Survey (TDHS) 2018, the study examines and compares the diverse deprivations faced by displaced and non-displaced households. A dimension on financial security is incorporated in addition to three standard dimensions used in the literature (education, health, and living standards). The analysis reveals significant disparities, with Syrian households experiencing a seven times higher incidence of multidimensional poverty compared to native Turkish households. The overall MPI score for the refugee community is 33 percentage points higher than the host community. Particularly, informal employment emerges as a nationwide issue. The findings contribute to the understanding of the well-being of Syrian refugees in Turkey and highlight the urgent need for targeted policies and interventions to address the simultaneous deprivations they face.
Product differentiation under loss aversion and demand uncertainty
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2023., 2023) Şimşirli, Osman.; Yılmaz, Murat.
This thesis analyzes, first, the relationship between loss aversion and demand uncertainty for vertical product differentiation, and second, the effect of loss aversion on the degree of horizontal product differentiation. In the vertical product differentiation model, we consider a three-stage duopoly game setting, where we incorporate demand uncertainty. Firms have incomplete information about the buyers’ true types and they face demand uncertainty. They announce their qualities before the demand uncertainty is resolved, and they announce their prices after the demand uncertainty is resolved. We find the subgame perfect Nash equilibrium for qualities and prices, and we also calculate the profit of each firm as well as the consumer surplus. We also conduct comparative statics to explain how loss aversion affects the outcomes, including the qualities, prices, profits and consumer surplus. We show that, for a wide variety of utility functions, the high quality firm’s equilibrium quality, and the equilibrium prices increase with the degree of loss aversion. Also, both firms benefit from a stronger loss aversion, but consumers are worse off when loss aversion is stronger. For the horizontal product differentiation model, we also consider a three-stage duopoly game setting, where the firms compete in locations in the first stage, before the buyers determine their reference locations, and compete in prices in the third stage, after the buyers determine their reference locations. Assuming that one firm has a cost advantage, we show that for a range of the degree of the cost advantage, the equilibrium exhibits maximal product differentiation under loss aversion, while we get minimal product differentiation when there is no loss aversion.
The income elasticity of healthcare spending in Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2023., 2023) Uçar, Yavuz Selim.; Erus, Burçay.
In this paper, we present the income elasticity of spending on healthcare services in Turkey, and analyze the effect of healthcare reforms and 2008 global financial crisis on the elasticities. We estimate the elasticities by using data from households’ out-ofpocket health expenditures between 2006 and 2019 and by utilizing two-part models and the quantile regression model. The elasticity results show that health is a highly elastic good in Turkey. In addition, the effect of the crisis remains significant through different quantiles of health expenditure. We also notice that after the crisis was over and the income of households started growing, due to increases in expenses of patient care services, the ratio of expenditure spent on pharmaceutical products shrunk too much and left its place to other categories, primarily outpatient care.
Markups, endogenous market power and misallocation in Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 2022., 2022) Karagöz, Korcan.; Çakır, Selcen.
Analyzing firms’ market power and the related aggregate misallocation is one of the intriguing subjects of the macroeconomics research frontier. However, market power and misallocation are mostly treated as exogenous factors, and the literature mostly focus on the effects of the exogenous variation in misallocation on aggregate economic outcomes (Hsieh and Klenow (2009), Restuccia and Rogerson (2008), Fattal Jaef (2018)). Nonetheless, Peters (2020) built up a model with endogenous misallocation where firm’s market power is endogenously determined and via interrelated dynamics of the model, and the equilibrium distribution of markups emerges in the form of a Pareto distribution through which the impact of the market power can be explicitly observed. In this thesis, I will apply the model of Peters (2020) to Turkey, and I will use different samples in terms of the firm size and technology levels. The aim of this study is to reveal if there is any misallocation that is coming from potentially excessive level of market power, and to understand the implications of the market power in the aggregate outcomes. Furthermore, a counterfactual analysis will be done to understand what would happen if the entry barriers in Turkey become weaker, so that the Turkish economy will resemble a more competitive setting. Usually considered an emerging economy, this analysis will be fundamental to understanding the creative destruction related dynamics in Turkey.
Dynamic voluntary contribution under time-inconsistency
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Altınok, Ahmet.; Yılmaz, Murat.
I study the voluntary public good provision model and introduce time inconsistent agents who have {u100000} preferences. There is a public project and finitely many agents where each agent is allowed to contribute any amount in any period before the project is completed. The agents have discontinuous and symmetric preferences over the total contribution with a jump when there is provision. There is complete information about the environment but imperfect information about others’ individual actions: each period, each agent observes only the total contribution made, not the other agents’ individual contributions. Assuming the agents are sophisticated, we characterize the set of equilibria. I compare the set of equilibria under sophisticated time-inconsistent agents to that under time-consistent agents with a discount factor equal to the average discount factor of a time-inconsistent agent. show that there are equilibria with time-inconsistent agents, which are not equilibria with time-consistent agents. We also show that there are some projects, which are completed by the sophisticated time-inconsistent agents earlier than the time-consistent agents complete. iv
Achieving growth through social innovation: a beyond GDP trial. Case studies of Turkey and Russia
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Chiklyaukova, Ekaterina.; Helvacıoğlu, Aslı Deniz.
Beyond GDP approach emphasizes that GDP alone is not comprehensive enough to capture the factors that contribute to the growth in the society. For several years, academicians try to identify the perfect indicator, which describes state of our well-being in the best way. The thesis’ novelty is in its aim of identification of the conceptual relationship between Beyond GDP and social innovation by analyzing the ecosystem of social innovation. There are three major aims defined. The first one is to identify the potential of “beyond GDP” on social innovation. The second one is to propose a novel approach to defining social innovation ecosystem in the light of Social Progress Index, Global Innovation Index and the Legatum Prosperity Index. Volunteering was added to the ecosystem as a unique enabler of social innovation. The development of optimal social innovation ecosystem is to be followed by the specific ones for Turkey and Russia, based on the analysis of respective index indicators scores. The third one is to conduct a case study of social innovation initiatives in Turkey and Russia. Two examples of local foundations that operate with a help of volunteers were examined. At the end of the thesis, policy making recommendations based on the best practices are provided.
A comparative study of bubble components
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Akyüz, Alp Güven Buğra.; Hatipoğlu Ali Ozan.
The co-movement of prices across the world was highlighted during the Credit Crunch of 2008 and the following periods. Since the price drop is attributed to bursting bubbles, it is of interest whether bubbles also follow a diffusion process across countries. This thesis, calculates the bubble percentages using the Kalman Filter approach and runs Granger causality test in order to determine how bubbles spill over across countries. The results suggest that bubbles indeed spill over and the diffusion process is determined by the development level and economic ties of countries rather than geographical proximity. Moreover, bubbles spill over to emerging markets from developed ones and not the other way around. Whereas, the bubbles spill over across developed economies in a bilateral fashion. iv
A horse race among models of strategic thinking across similar games
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Emirahmetoğlu, İbrahim.; Gürdal, Mehmet Yiğit.
Human behavior generally deviates from equilibrium in one-shot games. For this reason, a number of strategic thinking models which relax one or more assumptions of equilibrium have emerged. A natural extension to the emergence of these models is to compare their predictive and explanatory powers. In this study we have made a full-fledged comparison of eight prominent models (QRE, Lk, CH, NI, SLk, SCH, GCH and Lm) through a new game and its variations. We have analysed their performances in two ways. First, we out-of-sample predicted experimental results by these models and compared them by calculating the mean of squared distances between predictions and the observed data. Secondly we estimated the models for all games together and compared their log-likelihood values to determine their performance in explaining subjects’ behaviors. We found that models with payoff dependent noise had consistently better predictive performances than those without noisy behavior. Our main contribution is to show that a little modification on game structure might lead to drastically different results in the predictive performances and statistical fits of the models. Even across very similar games, there were significant changes on the performances of the models.
The Parisian Regulation Approach: capitalism as a panoply of crisis tendencies
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Güven, Barış.; Madra, Yahya Mete.
In this study, I analyze the Parisian Regulation Approach (PRA) developed as an intellectual response to the structural crisis of capitalism in the late 1960s and early 1970s. In theoretical and relational axes, I examine its ontological, epistemological and methodological assumptions and its relationship to other regulation approaches to grasp the conception of regulation in the PRA. Regime of accumulation, mode of regulation and mode of development are the major concepts produced by the PRA to study the capitalist mode of production and its crises. I analyze them and expose the crisis explanation of the approach. I specifically emphasize the understanding of the PRA of capitalism as a malleable mode of production under the combined effect of the development of forces of production and class struggles with major implications for the formation of its crises. Overaccumulation of capital as a tendency underlay to some degree the crisis formation in the PRA, and David Harvey and Simon Clarke who engaged in the PRA at some point in their intellectual journey formulated it as a general crisis theory. I analyze these later formulations of overaccumulation of capital and develop a critique of these primarily focusing on Harvey from the perspective I distilled from the PRA. It is in this sense that the present study contributes to the critical literature on the crisis theory.
Empirical essays on the informal economy
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Başbay, Mustafa Metin.; Torul, Orhan.
In this masters thesis, I empirically study the informal sector in two separate essays, both of which have implications for policy making and make original contributions to the understanding of informality around the world. In the first essay, I investigate the relationship between energy consumption and the size of the informal economy. Relying on panel data regression models, my estimation results show that at the aggregate level, energy intensity is inversely related to the size of the informal sector, providing actual empirical evidence on the presence of high labor and low capital intensity in the informal economy. Furthermore, I also find evidence for the presence of non-linearity and asymmetry in this relationship. In the second essay, I investigate the relationship between the informal sector employment, and micro-level socio-demographic characteristics, political attitudes and individual norms. Using self-reported data, I show that socio-demographic characteristics are strong predictors of the informal sector employment. Moreover, individuals preferences for an economically strong state, as much as their confidence in political institutions are significantly and positively correlated with the informal sector employment, whereas variables associated with confidence in market institutions are negatively correlated with the informal sector employment. I also show that individuals who participate in political processes have a lower probability of working in the informal sector. Finally, I show that individual norms, such as religiosity and tax morale are negatively correlated with the informal sector employment, as well.
Risk sharing rules and investment in groups
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Cangüven, Gökçen.; Gürdal, Mehmet Yiğit.
In this study, we consider a game among n investors, who individually choose to borrow a certain amount to invest in a risky project. We assume that the success probabilities for the risky projects are independent and that the individuals can agree upon a fully enforceable sharing rule. We define four major rules, namely Full Liability (FL), Loss Sharing (LS), Profit Sharing (PS) and Equal Sharing (ES), which differ in terms of the sharing of profits and losses across all investors. We compute the equilibrium investment levels and expected social welfare levels and investigate coalition formation structure under these rules. Our theoretical findings show that the game has a unique dominant strategy Nash equilibrium under each rule. Regarding the total equilibrium investment levels, although the ordering of the rules depends on the parameter values, we show a clear supremacy of ES and LS rules over FL and PS rules. Furthermore, through employing numerical analyses, we demonstrate the dominant structure of ES rule over other sharing rules in terms of individual, utilitarian and egalitarian social welfare levels. Lastly, we find that, with certain constraints on model parameters, two agents with identical risk aversion levels are able to form stable coalitions under each rule.
Systemic risk and heterogeneous leverage in banking networks: implications for banking regulation
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Sever, Can.; Kuzubaş, Tolga Umut.
In this paper, I study systemic risk implications of balance sheet heterogeneity in a banking network. More speci cally, I analyse systemic impacts of nancial leverage heterogeneity in a banking system under the existence of idiosyncratic shocks. It has been shown that, introducing leverage heterogeneity in the banking system strictly changes systemic risk measures and reveals the signi cance of bank spedicif characteristics. In the calibration, I have used the historical nancial leverage data of the US banking system used in a recent stress testing exercise conducted by the FED. Through experiments, I observe that relative systemic signi cance of the biggest and the most connected borrowers alters depending upon connectivity of network. The evolution of the network, systemic consequences of interbank market size and market segmentation are also analysed in case of idiosyncratic shocks with di erent target banks. This study is also related to the recent BASEL III regulations on systemic risk and the treatment of the Global Systemically Important Banks (GSIB's). This approach can be useful to assess to what extent the recent capital surcharges on GSIB's can be useful to curb the nancial fragility in the banking system. I show that, applying surcharge for the most levered banks reduces the total systemic risk existing in the banking system.
Statistical arbitrage in crude oil futures market
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2015.) Tamkoç, Mehmet Nazım.; Saltoğlu, Burak.
In this study, we use crude oil futures contracts that differ in maturity to come up with a trading algorithm that takes forecasted convenience yields as a base. Because there is a liquidity constraint, we take 5 different futures contracts with a maximum maturity of 5 months from January 1985 to December 2012. By forecasting convenience yields of each contract day by day, we develop a profitable real life simulated trading strategy. The results indicate that there exist statistical arbitrage opportunity in crude oil futures market. After controlling for transaction cost and interest payments, our trading algorithm yields 19.11%, 16.37%, 15.45% and 11.92% annualized returns for the contracts 2-month, 3-month, 4-month and 5-month maturities respectively. In this respect it outperforms alternative trading strategies and generates statistical arbitrage.
Two essays on informality
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2015., 2014.) Ertürk, Nebahat Ferda.; Elgin, Ceyhun.
The first part of this study intends to give a detailed account on the recent literature of economics of informality. In particular, we focus on effects and determinants of informality as well as measurement of informal activity. We present both theoretical and empirical papers that employ a variety of methods to study informality. In the second part of the paper we ask whether informal economy acts as a barrier to growth of GDP per-capita. This has been a contentious subject in the literature. Cross-country panel regressions for the period between 1960 and 2012 including 160 countries provide evidence for a robust negative relationship between size of informal economy and relative per capita income. Building on this evidence we simulate a simple two-sector (formal and informal) dynamic general equilibrium model and show that under the presence of an informal sector a larger fraction of the observed per capita income differences across countries can be accounted for.
Political instability and long run economic growth across the old world
(Thesis (Ph.D.)-Bogazici University. Institute for Graduate Studies in Social Sciences, 2014., 2014.) Kurt, Ezgi.; Karaman, Kamil Kıvanç.
This study investigates determinants of differences in the long run economic development across the Old World. It provides support for the primary role politics played in driving these differences. In particular, the evidence supports the hypothesis that from the tenth century on, the rise of equestrian warfare favored nomadic groups over settled societies in terms of military power. The military dominance of nomads induced political instability in the semi-arid steppes and surrounding regions they inhabited. Political instability, in turn, reduced economic growth. The hypothesis is investigated using a Difference in Difference (DD) empirical strategy with a data set of ninety-one countries from the fifth to the seventeenth centuries. The proxy used for economic growth is population and the main dependent variable, measuring the destabilizing impact of semi-arid steppes, is its distance to each country in the sample. Controlling for various geographical, historical and political variables, econometric results identify a significant and substantial negative impact of being proximate to the steppes on population levels after the tenth century. These findings shed light on one of the key questions in economic history, i.e. the gradual rise of the West, which was protected from the semi-arid steppes at the cost of other economic centers in the Old World, which were not. Rather than a unicausal mechanism, we point out to a complex interaction between geography, military technology and politics in driving the differences.
An evaluation of the post-1980 export performance of the Turkish manufacturing industry
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in Social Sciences, 1985., 1985.) Övet, Yonca.; Evcimen, Günar.
A comparison of stochastic models of natural gas consumption: an application for Turkey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2014., 2014.) Kiremitçiyan, Serli.; Kuzubaş, Tolga Umut.
In this thesis, we model the dynamic behaviour of natural gas consumption using continuous-time stochastic models to incorporate their significant advantages over the discrete-time models into the modeling process. In addition to offering a wide set of choices for the drift and volatility terms and yielding analytical solutions for any forecast horizon, continuous-time models can also be used in the pricing of contingent claims depending on natural gas consumption since they enable more reliable forecasts at high-frequency levels. Here, we also document that the per consumer natural gas consumption data exhibit stationarity, strong seasonality, mean reversion, and serial correlation. Hence, we study the application of a One-factor mean-reverting process and stochastic Gompertz diffusion model on the modeling of daily natural gas consumption in Istanbul, Turkey that will also incorporate the empirical observations. In the comparison of their forecasting performances which are tested via the backtesting method at different forecast horizons, we find out that the One-factor mean-reverting process is more advantageous than the Gompertz diffusion process. To illustrate the pricing implications of these models, we price two hypothetical contracts and find out that the results vary from one model to another and hence, the choice of model becomes crucial in the real world.
Informality in Turkey: evidence from a firm-level survey
(Thesis (M.A.) - Bogazici University. Institute for Graduate Studies in the Social Sciences, 2014., 2014.) Sezgin, Muhammed Burak.; Elgin, Ceyhun.
In this thesis, we use the results of a novel survey of 500 firms from 13 different sectors in Turkish economy and a two-sector general equilibrium model to measure the extent of informality in these sectors through a sectoral analysis as well as in country level. Afterwards, we evaluate the effects of two different policy tools, namely the level of income taxes and the level of tax enforcement on informality. Our results show that both are effective policy tools in tackling informality, enforcement is a steadily effective tool and the effect of taxation, while positive, shifts around depending on the enforcement level.

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