Dissolution of an Empire: Insights from the İstanbul Bourse and the Ottoman War Bond

• Published in: Defence and peace economics Vol. 29; no. 5; pp. 557 - 575
• Main Authors: Hanedar, Avni Önder, Hanedar, Elmas Yaldız, Torun, Erdost, Ertuğrul, Hasan Murat
• Format: Journal Article
• Language: English
• Published: Switzerland Routledge 29-07-2018; Taylor & Francis LLC
• Subjects: Dissolution; Empirical analysis; First World War; ICSS test; İstanbul bourse; Ottoman war bond; Peace; Republic of Turkey; Risk assessment; Structural breaks; Transformation; World War I; Istanbul Turkey; Ottoman Empire; Turkey
• ISSN: 1024-2694; 1476-8267
• DOI: 10.1080/10242694.2016.1239319

During the transformation period of the Ottoman Empire leading to the Republic of Turkey, many conflicts took place between 1918 and 1923. These conflicts interrupted the servicing of the Ottoman war bond. The reimbursement likelihood of this bond was related to the outcomes of First World War and the hostilities. This paper analyses the impacts of First World War and hostilities on the risk assessments regarding the Ottoman war debt, using manually collected data on the price of the Ottoman war bond traded at the İstanbul bourse between 1918 and 1925. The empirical results imply that the defeat of the Bulgarian army and the peace offer of Austria-Hungary were associated with the increasing premium demanded by investors of the bond. The victories of the Turkish National Movement and the peace offer of the Allies to end the hostilities by 1922 positively affected the likelihood of the servicing of the debt.