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Financial Stability and Reserve Option Mechanism as Automatic Stabilizer

Year 2020, Volume: 2 Issue: 2, 410 - 429, 13.03.2020

Bengül Gülümser Kaytancı Burak Buyun

Abstract

The Reserve Option Mechanism (ROM) is a macro-prudential policy instrument that allows the holding of a certain portion of the Turkish Lira required reserves in foreign currency or gold. This study contains the automatic stabilizer feature of ROM designed by the Central Bank of the Republic of Turkey (CRBT) to provide post-crisis financial stability which investigates through vector error correction (VEC) model. Automatic stabilizer function of ROM was investigated the effect of capital flows, exchange rate and usage of ROM variables on ROM by the impulse response analysis. As a result of impulse response analysis findings show that the ROM works as an automatic stabilizer, but this function is not symmtrical and efficient, and works of ROM will be better with more stable financial system.

Keywords

: reserve options mechanism financial stability impulse response analyses macro prudential policies

References

  • Alper, K., Kara, H. ve Yörükoğlu, M. (2012). Rezerv Opsiyonu Mekanizması, TCMB Ekonomi Notları, Sayı: 28.
  • Alper, K., Kara, H. ve Yörükoğlu, M., (2013). Reserve Options Mechanism, Central Bank Review, 13(1):1-14
  • Aslaner, O., Çıplak, U., Kara, H., ve Küçüksaraç, D. (2015). Reserve Option Mechanism: Does it Work as an Automatic Stabilizer?, Central Bank Review, 15(1):1-18
  • Aytuğ, H. (2017). Does the Reserve Options Mechanism Really Decrease Exchange Rate Volatility? The Synthetic Control Method Approach, International Review of Economics and Finance, 51 (2017) 405–416
  • Çevik, F. (2016). Sermaye Akımı Oynaklığı vee Kredi Büyümesinde Yeni Para Politikasının Önemi, Elektronik Sosyal Bilimler Dergisi, Bahar, 15(57).
  • Değerli, A. ve Fendoğlu, S. (2015). Reserve Option Mechanism as a Stabilizing Policy Tool: Evidence From Exchange Rate Expectations, International Review of Economics and Finance, 35, 166–179
  • Fama, E. F. (1970). Efficient Capital Market: AReview of Theoty and Empirical Work. The Journal of Finance, 25(2): 383-417.
  • Gök, İ. Y. (2016). Reserve Options Mechanism: The New Monetary Policy Tool of CBRT and its Effect On Exchange Rate Volatility, International Journal of Business and Economic Sciences Applied Research (IJBESAR), 9(3): 50-54
  • Kantar, L. (2017). Rezerv Opsiyon Mekanizması ve Döviz Kuru Volatilitesi: Türkiye Üzerine Bir Uygulama, T.C. İstanbul Üniversitesi Sosyal Bilimler Enstitüsü İşletme Anabilim Dalı, Finans Bilim Dalı, Doktora Tezi.
  • Kara, H. (2012). Küresel Kriz Sonrası Para Politikası, TCMB Çalışma Tebliği, No: 12/17.
  • Küçüksaraç, D., ve Özel, Ö. (2012). Rezerv Opsiyonu Mekanizması ve Optimal Rezerv Opsiyonu Katsayılarının Hesaplanması, TCMB Çalışma Tebliği No: 12/32
  • Özatay, F. (2018). Parasal İktisat Kuram ve Politika. (5. Baskı). Ankara: Efil Yayınevi
  • Afşin, Ş., Doğan, B. ve Berument, M. H. (2015). Effectiveness of the Reserve Option Mechanism as a Macroeconomic Prudential Tool: Evidence From Turkey, Applied Economics, 47:56, 6075-6087
  • Oduncu, A., Akçelik, Y. ve Ermişoğlu, E. (2013). Reserve Options Mechanism and FX Volatility, TCMB Workıng Paper, No: 13/03.
  • Vinals, J. (2010). Central Banking Lessons From The Crisis. IMF the Monetary and Capital Markets Department, 27, 1-42.
  • TCMB. (3 Ocak 2015) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2015-01
  • TCMB (01 Eylül 2016). Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2016-43
  • TCMB. (6 Kasım 2017) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2017-44
  • TCMB. (7 Mayıs 2018) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2018-13
  • TCMB. (6 Ağustos 2018) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2018-30
  • TCMB. (9 Mayıs 2019) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2019-21
  • TCMB (2012). Yıllık Rapor
  • TCMB (2016). Yıllık Rapor
  • TCMB (2012). Bülten, Sayı:28
  • https://www.tcmb.gov.tr/wps/wcm/connect/TR/TCMB+TR/Main+Menu/Temel+Faaliyetler/Para+Politikasi/Zorunlu+Karsilik+Oranlari/erişim tarihi 19.07.2019

Financial Stability and Reserve Option Mechanism as Automatic Stabilizer

Year 2020, Volume: 2 Issue: 2, 410 - 429, 13.03.2020

Bengül Gülümser Kaytancı Burak Buyun

Abstract

The Reserve Option Mechanism (ROM) is a macro-prudential policy instrument that allows the holding of a certain portion of the Turkish Lira required reserves in foreign currency or gold. This study contains the automatic stabilizer feature of ROM designed by the Central Bank of the Republic of Turkey (CRBT) to provide post-crisis financial stability which investigates through vector error correction (VEC) model. Automatic stabilizer function of ROM was investigated the effect of capital flows, exchange rate and usage of ROM variables on ROM by the impulse response analysis. As a result of impulse response analysis findings show that the ROM works as an automatic stabilizer, but this function is not symmtrical and efficient, and works of ROM will be better with more stable financial system.

Keywords

reserve options mechanism financial stability macro prudential policies impulse response analyses

References

  • Alper, K., Kara, H. ve Yörükoğlu, M. (2012). Rezerv Opsiyonu Mekanizması, TCMB Ekonomi Notları, Sayı: 28.
  • Alper, K., Kara, H. ve Yörükoğlu, M., (2013). Reserve Options Mechanism, Central Bank Review, 13(1):1-14
  • Aslaner, O., Çıplak, U., Kara, H., ve Küçüksaraç, D. (2015). Reserve Option Mechanism: Does it Work as an Automatic Stabilizer?, Central Bank Review, 15(1):1-18
  • Aytuğ, H. (2017). Does the Reserve Options Mechanism Really Decrease Exchange Rate Volatility? The Synthetic Control Method Approach, International Review of Economics and Finance, 51 (2017) 405–416
  • Çevik, F. (2016). Sermaye Akımı Oynaklığı vee Kredi Büyümesinde Yeni Para Politikasının Önemi, Elektronik Sosyal Bilimler Dergisi, Bahar, 15(57).
  • Değerli, A. ve Fendoğlu, S. (2015). Reserve Option Mechanism as a Stabilizing Policy Tool: Evidence From Exchange Rate Expectations, International Review of Economics and Finance, 35, 166–179
  • Fama, E. F. (1970). Efficient Capital Market: AReview of Theoty and Empirical Work. The Journal of Finance, 25(2): 383-417.
  • Gök, İ. Y. (2016). Reserve Options Mechanism: The New Monetary Policy Tool of CBRT and its Effect On Exchange Rate Volatility, International Journal of Business and Economic Sciences Applied Research (IJBESAR), 9(3): 50-54
  • Kantar, L. (2017). Rezerv Opsiyon Mekanizması ve Döviz Kuru Volatilitesi: Türkiye Üzerine Bir Uygulama, T.C. İstanbul Üniversitesi Sosyal Bilimler Enstitüsü İşletme Anabilim Dalı, Finans Bilim Dalı, Doktora Tezi.
  • Kara, H. (2012). Küresel Kriz Sonrası Para Politikası, TCMB Çalışma Tebliği, No: 12/17.
  • Küçüksaraç, D., ve Özel, Ö. (2012). Rezerv Opsiyonu Mekanizması ve Optimal Rezerv Opsiyonu Katsayılarının Hesaplanması, TCMB Çalışma Tebliği No: 12/32
  • Özatay, F. (2018). Parasal İktisat Kuram ve Politika. (5. Baskı). Ankara: Efil Yayınevi
  • Afşin, Ş., Doğan, B. ve Berument, M. H. (2015). Effectiveness of the Reserve Option Mechanism as a Macroeconomic Prudential Tool: Evidence From Turkey, Applied Economics, 47:56, 6075-6087
  • Oduncu, A., Akçelik, Y. ve Ermişoğlu, E. (2013). Reserve Options Mechanism and FX Volatility, TCMB Workıng Paper, No: 13/03.
  • Vinals, J. (2010). Central Banking Lessons From The Crisis. IMF the Monetary and Capital Markets Department, 27, 1-42.
  • TCMB. (3 Ocak 2015) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2015-01
  • TCMB (01 Eylül 2016). Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2016-43
  • TCMB. (6 Kasım 2017) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2017-44
  • TCMB. (7 Mayıs 2018) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2018-13
  • TCMB. (6 Ağustos 2018) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2018-30
  • TCMB. (9 Mayıs 2019) Zorunlu Karşılıklara İlişkin Basın Duyurusu, Sayı: 2019-21
  • TCMB (2012). Yıllık Rapor
  • TCMB (2016). Yıllık Rapor
  • TCMB (2012). Bülten, Sayı:28
  • https://www.tcmb.gov.tr/wps/wcm/connect/TR/TCMB+TR/Main+Menu/Temel+Faaliyetler/Para+Politikasi/Zorunlu+Karsilik+Oranlari/erişim tarihi 19.07.2019
There are 25 citations in total.

Details

Primary Language Turkish
Subjects Economics
Journal Section Research Articles
Authors

Bengül Gülümser Kaytancı 0000-0002-8152-8979

Burak Buyun 0000-0003-2594-7287

Publication Date March 13, 2020
Acceptance Date February 6, 2020
Published in Issue Year 2020 Volume: 2 Issue: 2

Cite

APA Kaytancı, B. G., & Buyun, B. (2020). Financial Stability and Reserve Option Mechanism as Automatic Stabilizer. BİLTÜRK Journal of Economics and Related Studies, 2(2), 410-429.
AMA Kaytancı BG, Buyun B. Financial Stability and Reserve Option Mechanism as Automatic Stabilizer. BILTURK. March 2020;2(2):410-429.
Chicago Kaytancı, Bengül Gülümser, and Burak Buyun. “Financial Stability and Reserve Option Mechanism As Automatic Stabilizer”. BİLTÜRK Journal of Economics and Related Studies 2, no. 2 (March 2020): 410-29.
EndNote Kaytancı BG, Buyun B (March 1, 2020) Financial Stability and Reserve Option Mechanism as Automatic Stabilizer. BİLTÜRK Journal of Economics and Related Studies 2 2 410–429.
IEEE B. G. Kaytancı and B. Buyun, “Financial Stability and Reserve Option Mechanism as Automatic Stabilizer”, BILTURK, vol. 2, no. 2, pp. 410–429, 2020.
ISNAD Kaytancı, Bengül Gülümser - Buyun, Burak. “Financial Stability and Reserve Option Mechanism As Automatic Stabilizer”. BİLTÜRK Journal of Economics and Related Studies 2/2 (March 2020), 410-429.
JAMA Kaytancı BG, Buyun B. Financial Stability and Reserve Option Mechanism as Automatic Stabilizer. BILTURK. 2020;2:410–429.
MLA Kaytancı, Bengül Gülümser and Burak Buyun. “Financial Stability and Reserve Option Mechanism As Automatic Stabilizer”. BİLTÜRK Journal of Economics and Related Studies, vol. 2, no. 2, 2020, pp. 410-29.
Vancouver Kaytancı BG, Buyun B. Financial Stability and Reserve Option Mechanism as Automatic Stabilizer. BILTURK. 2020;2(2):410-29.
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