Basel implementation as a monetary policy tool: Empirical analysis on Basel III

The relationship between the effectiveness of monatery policy and financial stability has come forward with the latest global crisis. In the process of crisis, the financial stability, including that in the developed countries, has gained importance with the control and supervision of the banking sector. With the latest crisis, financial stability has come forward as an objective of monetary policy. With respect to this, a trend towards the use of the regulations for the regulation of financial system as a tool for monetary policy has emerged. Next to the regulations based on the risk of the financial markets, the new tools based on the current obligations have been begun to be used as the monetary policy tool by the Central Banks. One of these tools is Basel regulations. Basel regulations are put into practice firstly in accordance with the capital adequacy ratio determined with the banks? risky assets. The structure of this has been changed with 2007-2008 crisis. First of all, a new concept of capital adequacy based on the obligations of financial institutions has been put forth. This ratio has become a new ground for the reserve policies based on leverage. TCMB implemented this tool as a new structural monetary policy after 2013. In this study, whether the questioned tool can become an effective monetary policy tool has been analyzed with an empirical practice. According to the results of the study, the questioned tool can be an effective monetary policy tool Keywords : BASEL, ADF, KPSS, Unit Root Test, Bounds Test, Monetary Policy