Integrating panel data regression and fuzzy decision-making approaches to evaluate the impact

Currency-Hedged Deposits (CHD) were introduced in Türkiye to hedge the currency risk. Hence, it is aimed to provide macroeconomic stability in this country. Nevertheless, the impact of this implication on banks’ participation is unclear. This study analyzes the impact of the foreign exchange hedge deposit (CHD) mechanism on the financial performance of participation banks in Türkiye. This study integrates fuzzy multi-criteria decision-making analysis with panel data regression. In this framework, data from these banks for 2021-2023 is considered. First, panel regression analysis is conducted for six participating banks. Second, a Euclidean distance-based CIMAS technique is used to find the most critical criteria. For this purpose, Fermatean fuzzy numbers are considered in this modelling process to handle uncertainties more effectively. The main contribution of this research is the hybrid consideration of panel data regression and fuzzy decision-making analysis. Owing to this combination, the impact of this new implication on bank participation can be more effectively identified. Econometric results indicate that CHD has a positive impact on profitability. On the other hand, risk management and compatibility with interest-free financing are the most critical factors.