Decision making on financial investment in Turkey by using ARDL long-term coefficients and AHP

Abstract

Mathematical modeling methods are frequently used for solving everyday problems. Decision making, one such method, can be used in every aspect of life for different scales such as micro (households), medium (companies), and macro (states) decisions. Due to the large number of parameters affecting decision, it is possible to make mistakes in the selection of the appropriate investment instrument with classical methods; hence, scarce resources may be wasted, and sometimes it may even be impossible to make a decision. This study seeks to answer the question “Which financial investment instrument should be selected under the current conditions?” using decision making problems. Factors affecting gold, USD, and EURO, which are selected as the financial investment instruments in Turkey, are examined using the autoregressive distributed lag (ARDL) bound test. The selected variables are monthly and belong to the January 2009 to May 2018 period. The ARDL results show that the selected financial investment instruments are affected by most of the factors separately. By using the coefficients obtained from the ARDL model, the analytic hierarchy process (AHP) model was established. According to the results of the model, the EURO was determined as the most suitable financial investment for Ahmet and others with the same preferences.