AGGREGATE LIQUIDITY CREATION OF ISLAMIC BANKS IN TURKEY

Yıl 2021, Cilt: 43 Sayı: 1, 197 - 212, 01.07.2021

Ozlem Akın S. Mehmet Ozsoy

https://doi.org/10.14780/muiibd.960332

Öz

This paper provides a detailed analysis of aggregate liquidity created by Islamic (participation) banks in
Turkey. Using quarterly regulatory dataset for the period of 2010–2017 and applying Berger and Bouwman
framework to measure liquidity creation, we document that the liquidity created by Turkish Islamic
(participation) banks has tripled (in inflation adjusted terms) in our sample period. Furthermore, we find
that Islamic banks have created liquidity both on and off their balance sheets. Finally, we observe that
Turkish Islamic banks have been creating more liquidity with their liabilities than their assets. Despite the
continuous upward trend in aggregate liquidity created by Turkish Islamic banks, their loan-to-asset and
deposit-to-asset ratios have been declining in our sample period, which suggests that the observed trend
has been driven by extensive margin (i.e., bank sizes growing in real terms) rather than the intensive margin
(banks creating liquidity more effectively).

Anahtar Kelimeler

Islamic Banks, Liquidity Creation, Turkey

Kaynakça

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