The borrowing preferences of the corporate sector are important in terms of financial stability. It is obvious that the FX loan utilization by firms with no FX income is very risky. FX loan costs, which are supposed to be low, may significantly exceed the TL loan costs depending on exchange rate developments.
Derivatives are not new to Turkish firms. They are already actively using derivative transactions, primarily swap, forwards and options. Moreover, the cost of forwards that are used by the corporate sector in managing the exchange rate risk is akin to banks’ costs.
Past experiences show that banks are able to roll over more than half of their external debt even in the most unfavorable economic and financial conditions.
We should keep in mind that the capital adequacy ratio, which moves downward due to exchange rate developments in the short term, can rebound owing to the rise in profitability in longer terms.
Recently, the share of financing companies in household liabilities has increased owing to the moderate growth in bank loans and the opening of new financing companies.
