Authors : Fatma Mansour and Hatice Dogukanli
Abstract: This study compares hedging Foreign exchange rate risk by derivatives between participation and conventional banks in Turkey. Data has been collected from senior management of 44 selected banks through questionnaires. The study used both primary and secondary data. Primary data was collected through questionnaires from 5 Islamic banks and secondary data was collected from the financial reports of 39 conventional banks. The sample covers all of the Islamic and conventional banks. The findings of this study show that participation (Islamic) banks are exposed more to exchange rate risk than conventional banks. In addition, Islamic swaps were found to be the most important mechanism, however, swaps contract was found to be the most important in conventional banks. This is the first study, that compares exchange rate exposure degree and hedging strategies in participation and conventional banks in Turkey.
Fatma Mansour and Hatice Dogukanli, 2019. Exchange Rate Risk Management in Participation (Islamic) and Conventional Banks in Turkey: A Comparative Study. International Business Management, 13: 37-43.