Abstract
In this study, we aimed to explain the influencing factors of interest rate risk in Turkish banking sector. Within this scope, 20 deposit banks in Turkey were evaluated. Furthermore, annual data for the periods between 2006 and 2015 was analyzed by using panel logit method. According to the results of this analysis, it was identified that 2 explanatory variables affect interest rate risk of Turkish banks. First of all, it was determined that banks, which have higher amount of deposits, are exposed to higher amount of interest rate risk. In addition to this situation, it was also defined that there is a negative relationship between the amount of capital and interest rate risk. As a result of this issue, it was recommended that Turkish banks should increase capital amount in order to manage interest rate risk more effectively.
Highlights
Banks play an intermediary role between depositors and investors
The main risks in the banking sectors can be classified as credit risk, market risk and operational risk
It was determined that the deviation in forward rates affect interest rate risk
Summary
Banks play an intermediary role between depositors and investors. Owing to this aspect, depositors can gain interest for their savings and investors can reach sources much . In addition to the increase in the popularity, there is increase in the risks which should be managed by the banks. The main risks in the banking sectors can be classified as credit risk, market risk and operational risk. Operational risk includes the risks other than credit and market risk. It mainly contains four different aspects, which are people, system, process and external factor (Van Den Brink, 2002)
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