Dilvin TaskinGorkem SariyerTaskin, DilvinSariyer, Gorkem2025-10-0620202573-013410.3934/QFE.2020012http://dx.doi.org/10.3934/QFE.2020012https://gcris.yasar.edu.tr/handle/123456789/5726https://doi.org/10.3934/QFE.2020012Recent financial turmoil raised suspicions about the impact of derivatives usage on banking stability. Considering the period between 2007 and 2017 this paper analyzes the impact of derivatives on the financial stability and performance of the Turkish banking system. The stability of the banking is measured by considering the Z-index which shows the probability of and calculated for each bank. The second aim of this paper is to determine the impact of bank specific characteristics on the derivatives usage of banks. Panel regression models and factorial ANOVA analysis is adopted to perform the analysis. The results show that derivatives usage of banks decrease the profitability of banking system and increase the bank risk. The determinants of derivative usage also suggest that banks do not use derivatives to hedge their risks.Englishinfo:eu-repo/semantics/openAccessbank risk, Z-index, derivative usage, bank profitability, Turkish banking sectorINTEREST-RATE RISK, COMPETITION, MANAGEMENT, IMPACTDerivative UsageZ-indexBank ProfitabilityBank RiskTurkish Banking SectorArticle