Effects of central bank of the republic of Turkey's "policy interest rate" resolutions on the benchmark bond rate, borsa İstanbul banking index (Xbank index) and bank's performance

This PhD thesis aims to examine the impact of policy interest rate (PIR) decisions of the Central Bank of The Republic of Turkey (CBRT) on the benchmark interest rate, BIST banking index (XBANK) and other BIST indices and certain performance ratios of the Turkish Banking sector in the period of January 2005 to December 2014. We think that the research subject is important because CBRT uses the PIR as an effective tool to affect the financial and economic status through monetary policies, combat with emerging risks, and ensure both price and financial stability as a final target. The thesis consists of four chapters. The first chapter provides information on the financial sector, the second chapter reviews monetary policies and their economic and financial effects, the third chapter provides literature review, introduces data sources, data analysis period, research method and hypotheses, and fourth chapter discusses analysis results. Vector Autoregressive (VAR) Method has been used in this study.The findings of this thesis has shown that CBRT PIR decisions have had a positive and strong impact on the benchmark bond interest rate and a negative impact on the BIST XBANK and other BIST indices in consistency with previous studies. Furthermore, the results about return on assets, return on equity, net interest margin and profit before tax per employee ratios selected among from the performance ratios of the Turkish Banking sector, have indicated that these ratios have responded to PIR announcements within two months following the TCMB meeting.