AN ATTEMPT FOR APPLYING THE LCR AND CAR REQUIREMENTS TO TURKISH IRON AND STEEL SECTOR

Abstract

Iron and steel sector is one of the key determinants of a country's GDP and Industrial Production, both due to size of its volume and the strategic importance of its outputs. Due to high installation costs, it is quite costly to compensate capacity losses. Hence, the financial viability of the iron and steel sector, which is in the locomotive position, is critical for the continuity of intermediate goods supply and overall price volatility. The sector also comprises an important part of banking system total credit risk, so the measurement of the sector’s "liquidity" capacity of the balance sheet and the resistance of the equity against possible shocks determines the overall credit quality. It is aimed that the Basel III liquidity and capital adequacy criteria which are applied to the financial institutions will be applied on the balance sheets of selected iron and steel sector companies, since the risks of the real sector constitute counterparty risk for financial sector firm balance sheets.