Abstract:

In this study, it is focused on how and to what extent today’s fundamental banking regulation tools such as capital, liquidity, provisioning and reserve requirements applied by international agencies do influence the financial stability in both short and long term. In this analysis, the data derived from quarterly financial reports of Turkish Banking System for the period of 1990-2010 are used in order to display and measure the relationship between financial stability and banking regulations. According to our model, banking regulations, specifically liquidity management, capital adequacy and provision policy are meaningful and influential factors over financial stability in the long run. Also, in the short run, provision policy and liquidity management are significant banking regulation tools.

Keywords: