USE OF HEDGING INSTRUMENTS IN THE TURKISH BANKING SECTOR

Abstract

Systemic banking crises are highly destructive events that cause a decline in economic activity, financial intermediation and ultimately social welfare. There were many banking crises around the world, and many countries were exposed to these banking crises at least once in the last 50 years. On the other hand, some countries have been defeated by these crises many times due to their fragile economic and political structures. Currency risk, liquidity risk and interest rate risk that banks can manage are among the main risks that banks are exposed to, which cause systematic banking crises. In addition to the current legislation such as the Banking Law, the Turkish Commercial Law, and the Law of Obligations, the Basel Criteria, which are effective on the banking system with their advisory decisions, also aimed to prevent financial crises that may be caused by banks by keeping the aforementioned risks under control.