Analysis of the Relationship between Economic Freedom Index and Stock Market Indices; Evidence from Turkey

According to the Heritage Foundation Economic Freedom Index, Turkey, with a overall score of 65.4, seems below the regional average. On the other hand, BIST 100 has a good performance with a nearly %20 rise from 2016 to 2017 except the last nine-month period performance. The objective of this study is to analyze the causality relationship between Economic Freedom Index and BIST 100 in the period of 1995-2018 by employing Fourier KPSS Test and Fourier Granger Causality Test. The results supported no causality relationship between economic freedom index and stock market indices in Turkey in the period of 1995-2018