Edited By Engin ÇAKIR and Yusuf KADERLİ
Social sciences are made up of science disciplines that research humanity, society, and the world with a human dimension, and therefore its domain of influence is also serious and wide. Naturally, the social scientist has the power to influence society with his/her research and writing. This book aims to add the contributions of academicians from different disciplines to the social sciences fields they specialize in the academic literature and to give an idea about new researches. The book contains scientific articles on business, economics, public finance, tourism, and international relations.
The Use of Spatial Models: Examples from Financial Market Applications: Sevgi Eda Tuzcu
Sevgi Eda Tuzcu
Abstract Spatial econometrics has been used in many areas in the social sciences including financial studies. However, its application is heavily criticized for several reasons. This chapter aims to highlight the common mistakes in the empirical applications of spatial models while providing examples from financial market studies. For this purpose, first, the spatial model selection process and the interpretation of the obtained coefficients are examined. These two issues are often misunderstood and confused with the non-spatial models. Second, the determination of the spatial weight matrices in the spatial models which represent the distance among the units of analysis is investigated. There is no a-priori theory to guide for the determination of spatial weight matrices, so different studies employ different distance definitions. Although this part directly influences the results obtained from the models, many applications overlook the construction process. In this chapter, the use of weight matrices in financial market studies is also explained. By highlighting these issues once more, this study guides the practitioners who want to use spatial models in their analysis.
Keywords: Spatial Model Selection, Coefficient Interpretation, Distance Definitions, Financial Market Studies
This chapter aims to review the common mistakes in the applications of spatial models while giving examples from the financial market studies. Spatial models differ from the non-spatial techniques in many ways. Yet, its applications are still subject to criticism. Financial market studies with spatial applications are not exceptions. Highlighting once more these errors, I believe, will help practitioners particularly in the...
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