ABSTRACT

This study examines the impact of the free float ratio on the liquidity of stocks traded on Borsa İstanbul during the COVID-19 pandemic. The turnover ratio is used as the liquidity indicator, and multivariate regression analyses are conducted using monthly data from January 2020 to September 2024. The model includes a dummy variable representing the COVID-19 crisis period and an interaction term between this dummy variable and the free float ratio. Additional firm-level control variables such as volatility, return, stock price, and market capitalization are also incorporated. The findings reveal that the free float ratio positively affects market liquidity, and this effect becomes stronger during the crisis period. A significant increase in trading volume was observed, likely driven by heightened retail investor interest. The results indicate that the free float ratio contributes not only to liquidity under normal market conditions but also supports market stability during times of heightened risk. Contrary to expectations, a liquidity dry-up was not observed during the COVID-19 period in Borsa İstanbul; instead, market liquidity improved, highlighting the structural role of free float in enhancing market resilience.

JEL Classification: C58, G14, G41