The Impact of Derivatives on Financial Stability in Turkish Economy Evidence from the Istanbul Stock Exchange and TurkDEX

International Research Journal of Finance and Economics, No. 9, 2007

21 Pages Posted: 5 Jun 2007

See all articles by Engin Kurun

Engin Kurun

Istanbul Bilgi University - Takasbank

Mustafa Kemal Yilmaz

Istanbul Stock Exchange; Marmara University - School of Banking and Insurance

Abstract

This paper presents empirical evidence from the Turkish capital market by investigating the risk perception of the companies, their risk management policies and discusses the impact of derivatives on the financial stability in Turkish economy. It focuses on non-financial companies that play a vital role in foreign trade operations and have close relations with the banking industry. The results show that most of the companies give priority to currency risk, followed by commodity price risk. Surprisingly, they do not pay much attention to interest rate risk. There is also a close relationship between firm size and derivatives usage; large firms tend to use derivatives more. Furthermore, the analysis reveals that the exchange rate exposure is positively correlated with the firm leverage. Although the firms know Turkish Derivatives Exchange (TurkDEX) and are aware of derivative products, most of them are reluctant to use them because of the lack of education and experience, besides high transaction costs and volatile market conditions.

Keywords: financial stability, derivatives usage, risk management, non-financial firms, TurkDEX

JEL Classification: E44, G3, G15

Suggested Citation

Kurun, Engin and Yilmaz, Mustafa Kemal, The Impact of Derivatives on Financial Stability in Turkish Economy Evidence from the Istanbul Stock Exchange and TurkDEX. International Research Journal of Finance and Economics, No. 9, 2007, Available at SSRN: https://ssrn.com/abstract=991112

Engin Kurun (Contact Author)

Istanbul Bilgi University - Takasbank ( email )

Istanbul, 34381
Turkey
90-212-3152185 (Phone)

Mustafa Kemal Yilmaz

Istanbul Stock Exchange ( email )

Istanbul Menkul Kiymetler Borsasi
Istinye 80860
Istanbul
Turkey

Marmara University - School of Banking and Insurance

Goztepe Campus
Istanbul, 34722
Turkey

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
528
Abstract Views
2,375
Rank
97,264
PlumX Metrics