The effect of derivative financial assets on capital structure: The bank evidence on Turkey

The aim of this thesis is to investigate the effect of derivative financial instruments on banks' capital structure. For this purpose, fistly, the conceptual framework related to capital structure and derivative financial instruments was discussed. Afterwards, capital structure in banking sector, BASEL regulations and derivative instruments in banking sector were examined. In the application part of the thesis, the effect of derivative products use in Turkish banks on capital structure were examined. Panel data analysis was used as the method. Capital structure variables were used as dependent variables, the use of derivatives on assets and liabilities were used as an independent variable. Besides, tangibility, profitability, size, risk, growth opportunities and liquidity variables were used as a control variable. A total of 12 models have been established in order to analyze the effect of derivative use on assets and liabilities on capital structure. As a result of the analysis, the effect of derivative use on borrowing was found significant in 8 models and insignificant in 4 models. The relationship was found to be positive in all models. In addition, profitability and liquidity variables were negatively corelated with borrowing and tangibility, size, risk and growth opportunities variables were positively corelated with borrowing.