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As part of a project carried out in cooperation between Kyrgyz-Turkish Manas University (KTMU) and Anadolu University, Financial Risk Meter (FRM) models have been developed to monitor risks in the financial systems of Türkiye and Kyrgyzstan. The project is led by Assoc. Prof. Dr. Ömer Tuğsal Doruk, a faculty member at the Faculty of Economics and Administrative Sciences of KTMU, and Prof. Dr. Hasan Murat Ertuğrul, a faculty member at the Faculty of Economics and Administrative Sciences of Anadolu University. Funded by the KTMU Scientific Research Projects (BAP) program, the project has produced separate indexes for the two countries using the same methodology. The indexes aim to examine changes in financial risks over time and to comparatively assess the effects of economic shocks. The study also aims to provide a regular scientific indicator that can be used by policymakers, financial institutions, and researchers.

Accumulated Risks in the Financial System Are Evaluated Collectively

Interdependencies among financial institutions can cause a problem arising in one institution to spread to other institutions. Therefore, the project focuses not only on the risks carried by individual institutions but also on vulnerabilities that emerge across the financial system as a whole. Described as a “financial risk thermometer,” the FRM aims to measure systemic risk by taking into account institutions’ tendency to move together and experience financial stress during the same period. An increase in the index value indicates that the risks and vulnerabilities monitored by the model are increasing, while a decrease indicates that they are relatively declining. This approach takes into account the possibility that even a financial institution that appears strong on its own may be affected by shocks affecting the financial system as a whole. Thus, it enables risks to be evaluated within the framework of relationships among financial institutions.

A Common Methodology Enables Comparison of Risk Dynamics in the Two Countries

The same methodological approach was used for the two separate indexes developed for Türkiye and Kyrgyzstan as part of the project. This common framework supports monitoring changes in the risks within each country’s financial system and allows economic fluctuations occurring in different periods to be examined comparatively. The indexes are intended to facilitate the assessment of periods when financial stress intensifies and to make the evolution of risks over time more visible. The study transforms the research cooperation between the two universities into a practical application for monitoring financial systems.

Kyrgyzstan Financial Risk Index Could Be Published Monthly

The Kyrgyzstan component of the study could be regularly presented to the public under the name “Kyrgyz-Turkish Manas University Financial Risk Index.” Regular publication of the index could contribute to the monitoring of financial vulnerabilities by policymakers and regulatory authorities, as well as to risk assessment processes for banks and other financial institutions. The index is also expected to provide a source for academic research examining the financial risk dynamics of the two countries.The study developed through cooperation between KTMU and Anadolu University aims to provide the public with a regularly updated indicator that supports the early identification of financial risks, makes the risk outlook in financial markets more understandable, and contributes to the monitoring of financial stability.