Research on the use of derivative financial instruments in the Turkish banking sector

With the rapid development of technology and the financial sector, global financial markets have become increasingly integrated, which has increased the importance of risk management for investors and banks. In particular, the need for protection against exchange rate and interest rate fluctuations brought about by globalization has led to the diversification and proliferation of financial instruments. Accordingly, derivative market instruments such as forwards, futures, options, and swaps are beginning to be used for hedging, speculation, and occasionally arbitrage purposes in underdeveloped markets. Companies and investors can minimize uncertainties about the future thanks to derivative products, which increases the interest in these financial instruments both globally and in Turkey. However, the effect of the use of derivative financial instruments by deposit banks in Turkey on profitability and risk does not create a significant difference. On the other hand, it is determined that the size of banks and their capital adequacy ratios have a statistically positive and significant effect on profitability and risk. The main purpose of derivative products in financial markets is to transfer or effectively manage risk. In recent years, the widespread use of derivative products in the financial sector has attracted attention, and banks in Turkey have begun to give more place to these instruments in fund management. Therefore, determining the factors affecting the use of derivative products in the banking sector is of great importance.