Effect of credit diversification for prevention of credit risk in banking sector and an application

This dissertation aims at investigating the preventing policies applied by banks for thecredit risk. Following the comprehensive analysis of the concepts of the credit risk and creditrisk management, the study explored the policies applied in credit risk management. Drawingon the data obtained from the application on the trading banks in Turkey. The study aimed atfind out whether the credit diversification which is one of the policies in credit riskmanagement, raises the credit risks of the banks. The application results show that the tradingbanks diversify their loan portfolios on the avarage but diversification has no influence oncredit risk.