DEPOSIT INSURANCE AND INTEREST RATE VARIABILITY:
THE TURKISH BANKING SECTOR IN THE 1990S

Emre ALPER (Boğaziçi University)
Özde ÖZTEKIN (Boğaziçi University)

Using a weekly panel data on Turkish banks, impact of the 100% deposit insurance on the deposit interest rate variability of the Turkish banks will be examined. In particular, we expect a significant increase in the variability of the offered-deposit interest rates following April 1994 banking reform involving the institution of 100% guarantee on deposits. The results of this analysis will shed light on the current problems that the Turkish banking system is facing due to the regulatory failure of the 1990s.