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Reforms and Supervisory Organizations: Lessons from the History of the Istanbul Bourse, 1873–1883

Research in Economic History

ISBN: 978-1-78743-120-1, eISBN: 978-1-78743-119-5

Publication date: 25 July 2017


Inefficiencies in the fiscal and monetary systems of the Ottoman Empire led to a higher debt burden over time and the bankruptcy for the Ottoman state in 1875. To deal with these inefficiencies, reforms were implemented: supervisory organizations were established and the gold standard was adopted. How did investors at the Istanbul Bourse view these reforms? We manually collected data on the price of Ottoman government bonds on the Bourse from 1873 to 1883. Using the generalized autoregressive conditional heteroscedasticity (GARCH) methodology, we identify short-run and permanent changes in volatility of bond returns subsequent to the reforms. Our results suggest investors responded positively, by accepting lower yield premia, to adoption of the gold standard, and foundation of the Ottoman Public Debt Administration which had European sponsors, but did not respond positively to reforms that relied on purely local institutions.




We should like to thank Nurhan Davutyan, Susan Wolcott, Erdost Torun, Canan Yıldırım and participants of INSTFIN 2016 at Kadir Has University for help and suggestions. We are grateful for comments of two anonymous referees.


Hanedar, E.Y., Hanedar, A.Ö. and Çelikay, F. (2017), "Reforms and Supervisory Organizations: Lessons from the History of the Istanbul Bourse, 1873–1883", Research in Economic History (Research in Economic History, Vol. 33), Emerald Publishing Limited, Leeds, pp. 115-137.



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