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WAS THERE A GUARANTEE EFFECT FOR THE OTTOMAN LOANS IN THE NINETEENTH CENTURY?

Authors

  • HUSEYIN AL

    1. Banking Regulation and Supervision Agency
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    • I would like to thank Professor Emeritus Larry D. Neal at University of Illinois at Urbana-Champaign, my colleagues Aziz Turhan and Yakup Asarkaya and anonymous referees of this journal for their valuable comments and suggestions.


Abstract

This study analyses the effect of formal guarantees of the British government on the performance of Turkish bonds issued in the second half of the nineteenth century. We compare the yields and prices of 11 bonds issued by the Ottoman government with different guarantees attached to each bond. Our findings indicate that the formal guarantee of the British government was significant in determining the prices and yields of Ottoman bonds. Even though the British guarantee had no effect on Ottoman institutions, practices, and fiscal fundamentals, the yields on the guaranteed loan did not move together with other Ottoman loans.

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