IDEAS home Printed from https://ideas.repec.org/a/bor/iserev/v9y2007i35p1-10.html
   My bibliography  Save this article

How to Manage the Mortgage Credit Risk in Turkey? Can Dual-indexed Mortgages be a Remedy?

Author

Listed:
  • Ali Alp
  • M. Mete Doganay

Abstract

A market-oriented housing finance system has been under discussion in Turkey recently. In this article we analyze different types of mortgages that have been used in developed and developing countries to select the one that is most appropriate for Turkey-one which minimizes risks for both lenders and borrowers. Each type of mortgage presents different risks to borrowers and lenders. After taking into consideration the economic history of Turkey, we conclude that the most appropriate mortgage for Turkey that minimizes risk is the dual-indexed mortgage model. We test this model by using data from the most volatile period of the Turkish economy, applying historical simulation and Monte-Carlo simulation. We find that, using this model; the total loan is paid off in a reasonable period without causing substantial difficulty for lenders and borrowers. Analyses confirm that borrowers and lenders are exposed to minimum risk if this type of mortgage is originated in Turkey.

Suggested Citation

  • Ali Alp & M. Mete Doganay, 2007. "How to Manage the Mortgage Credit Risk in Turkey? Can Dual-indexed Mortgages be a Remedy?," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 9(35), pages 1-10.
    • Handle: RePEc:bor:iserev:v:9:y:2007:i:35:p:1-10
    as

    Download full text from publisher

    File URL: http://www.borsaistanbul.com/datum/imkbdergi/EN/ISE_Review_35.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Housing finance; mortgages; dual-indexed mortgages;
    All these keywords.

    JEL classification:

    • G - Financial Economics
    • G - Financial Economics
    • H - Public Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bor:iserev:v:9:y:2007:i:35:p:1-10. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ahmet Palu (email available below). General contact details of provider: https://edirc.repec.org/data/rdisetr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.