Examining the Relationship between Consumer Confidence Index and Borsa Istanbul Sector Indices

Decisions of consumers based on psychological factors affect the income of the companies and thus the financial markets. In this respect, there should be a close relationship between consumer confidence and macroeconomic parameters. Consumer Confidence Index is one of the leading indicators of consumers’ expectation about economy. In this paper the relationship between the consumer confidence index and 18 Borsa Istanbul indexes has been examined for the period of 2006:01-2016:11. The cointegration relationship between the variables determined to be stationary at different orders is examined by the Bound Test. Results showed that there is a long-term relationship between the Consumer Confidence Index and all stock indexes in the study. In addition, it is determined that the increase in the consumer confidence index affects 9 index’ returns positively in the short term. Causality results show that stock indices are the cause of consumer confidence