Abstract
This paper aims to examine participation banks’ herd behavior in their lending decisions in Turkey. Herding was analyzed by using the Lakonishock, Shleifer and Vishny (LSV) and Frey, Herbst and Walter (FHW) herding measures during the period from 2010 to 2020. The study allows to calculate the LSV and FHW measures for loans outstanding to eight different industries, as well. The results provided an evidence of significant herding in participation banks’ lending decisions during the entire sample. On the other hand, banks’ lending decisions tend to be affected more, in particular, during fluctuations in the market and wholesale trade&brokerage and construction industries are dominant borrowers under these uncertain conditions.
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