In this study, the effects of some bank specific characteristics on interest rate swap usage are examined for the period 2007Q3-2017Q4. For this purpose, dynamic panel data estimation is used for top six Turkish private commercial banks. The results suggest that a banks asset size, interest rate risk profile and its credit rating play a major role in its interest rate swap usage. However, asset quality, capital position and return performance are not significant determinants of interest rate swap usage. Therefore, the results indicate that creditworthiness of swap counterparties is an important consideration for market participants. Moreover, besides their possible economies-of-scale advantages in swap market participation, larger banks may also be perceived as more credible due to the too-big-to-fail perception. Furthermore, banks having greater dependence on interest margin profits seem to use interest rate swaps more intensively as well to reduce their interest rate exposure.
Key words: Interest Rate Swap Usage, Top Six Turkish Private Commercial Banks, Panel Estimation. JEL Codes: G12, G21, C23. Article Language: EnglishTurkish
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