Contents



Preface

The effect of globalization and easy access to technology initiated the transformation to an information-oriented society. This transformation means that complete and satisfactory statistical results, which can only be achieved through appropriate methods, are now a necessity. Additionally, the emergence of specialized branches led to a movement away from the stereotypical patterns and the development of new patterns that are more in line with the current economic and financial structure. Financial markets, which do not get stuck only in theoretical structure and develop in practice, play an important role in the sustainable growth of the economy. The starting point of the financial models is the uncertainty faced by investors that include the uncertainty in the behavior of and thus the uncertainty in market prices. Therefore, the existence of financial econometrics is based on uncertainty. The structure and effect of fluctuations are determined using econometrics theory in the modeling and estimation process of uncertainties in financial models. The development of econometrics that makes use of data, statistical inference methods, and structural or descriptive modeling to solve financial and economic problems has been paralleled by the increasing variety and complexity of financial products. Efforts to measure fluctuations in terms of time, dimension, and turning/breaking points in the context of financial developments and the desire to have the best return in financial market practices with the minimum loss can be counted as some of the reasons why econometrics theory develops from linear to nonlinear models. Financial market mechanisms can be better explained by the development of models in the domains of martingales and non-linear time series, the use of parametric and non-parametric estimation methods, the use of diffusion equations, and an approximation for pricing and derivatives. Gaining the ability to build and develop a model based on events/problems experienced in life is important both in terms of solving the problems and evaluating the new models/methods in the field of application. With this in mind, the models are established on real problems with the aim of developing new models and/or achieving policy proposals through appropriate analyses

This book aims to introduce the mathematical/statistical and econometrical underpinnings of the main tools used in empirical economics and empirical finance in an effort to bridge the gap between analytic, closed-form methods, and numerical methods and also outline the econometrics models readily applicable to financial markets using linear and nonlinear approaches. The main topics are organized to gain a profound and detailed understanding of theory and methods and to understand the interplay between interrelated field techniques and modeling assumptions both for theoretical and practical

**Dr. Mehmet Kenan Terzioğlu**

Econometrics Department, Balkan Campus, Edirne, Turkey

University of Montenegro,

Faculty of Economics and Administrative Sciences,

Associate Professor, Trakya University,

**Gordana Djurovic**

that would be beneficial in solving problems.

applications.
