Use of derivative in risk management for banking sector: The case of Turkey

The banking sector should cover practices that will ensure the efficient functioning of financial systems. Accordingly, financial systems and practices are basically formed on the existence and protection of a certain risk. In order to avoid this risk, banks can take more successful steps in crisis periods or easily overcome the crisis processes. In another case, the concept of preventing these risks and combating them to the best extent should be put forward in order to prevent banks from reaching bankruptcy threshold. The evaluation emphasized within the scope of the research is to ensure the risk management of the Turkish banking sector in an effective profile, to ensure the use of derivative products and to determine the effectiveness of applications. In this study, which is developed for this purpose, the quality of derivative product applications are examined between 2002-2018 based on 17 years process. At the end of the research, rather than making an assessment that it will improve at the end of 17 years, it is established that it would improve at the end of a certain period. In other words, it is considered important to make the analysis based on periodic evaluations. As a result of the 17-year evaluation, it is not possible to provide a clear figure due to the fact that the analysis is meaningless at the statistical level. Key Words: Banking Sector, Risk Management, Derivatives