The use of derivative products in the turkish banking sector

The banking sector, in its pursuit of profitability and protection against market risks, encounters derivative products as it navigates the realm of financial instruments, which such as swaps, options, futures, and forwards offer users arbitrage, hedging, and speculation opportunities, contributing significantly to the dynamism of both the Turkish banking system and the global financial landscape. This study explores the risks faced by the banking sector, the purposes for which derivative products have been developed to address these risks, and the various types of derivative products employed. The study analyzes data from the top 10 banks by asset size in 2017 and 2022, examining the intensity of derivative product usage. The study found that derivative product usage in the Turkish banking system is primarily driven by trading purposes, and that the intensity of derivative product usage has consistently increased year after year.