THE EFFECT OF GLOBAL FINANCIAL CRISIS ON SECURITIES PORTFOLIO OF DEPOSIT BANKS: A DIFFERENCE-IN-DIFFERENCES METHOD FOR TURKEY

Abstract

This study analyzes the effects of the global financial crisis of 2008 upon public and private deposit banks’ securities portfolio in Turkey for the quarterly period between 2005 (Q1) and 2015 (Q4). Difference-in-Differences (DiD) method is employed to solve the research question of this paper, which is whether or not there exist a significant change in differences between Turkish public and private banks’ ratio of securities (financial assets) to total assets during and after the crisis. This study concludes by suggesting that after the global financial crisis, securities to assets ratio of publicly owned deposit banks significantly differed from that of privately owned ones in Turkey.Compared to the private deposit banks, there has been a significant decrease in the specified ratio of public deposit banks. This can be explained by taking into account the very nature of public banks. The results of the econometric analyses indicate that after the crisis, unlike the private deposit banks, state-owned deposit banks held fewer securities in their total assets in Turkey, which is in line with the behavior of lending more to eliminate the negative effects of the crisis of 2008.