Cross-border Transactions and Network Analysis: Evidence from Turkey

Tuba Pelin Sumer and Suheyla Ozyildirim

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: Funding from foreign banks in repo, deposit and loan type is an important financing channel for Turkish banks. For hedging currency risk, Turkish banks are also making derivative transactions with foreign counterparties. In this paper, we study on-balance and off-balance sheet relations between Turkish banks and foreign-domiciled banks for 2014-2018 period using network analysis techniques. We group banks according to their business models (islamic vs conventional) and ownership structure (related vs unrelated) and document the evolution of cross-border relationships. We find that islamic domestic banks prefer islamic counterparties in on-balance sheet transactions, however they also work with the conventional banks in the derivative transactions. Additionally, we show that the share of funding from foreign domiciled banks is higher for the domestic subsidiaries of foreign banks. Finally, we find that the currency movement in 2018 seems to change some of the cross-border relations.Creation-Date: 2021

Keywords: Cross-border bank lending; Network analysis; Financial interconnectedness (search for similar items in EconPapers)
JEL-codes: F34 G15 G21 L14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara and nep-ban
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2122

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