This study examines the role of peer effect on bank leverage decisions in the Turkish banking sector. Data from 21 deposit banks operating between 2007 and 2022 were analysed using the Panel-Corrected Standard Errors (PCSE) method. In the model, the dependent variable is the bank leverage ratio, the independent variable is peer bank leverage, and the control variables are bank size, liquidity ratio, and loss provisions/total assets ratio. The findings show that peer influence is positive and significant, indicating that their peers' financial behaviour influences banks' leverage decisions. The study aims to demonstrate that bank decisions are shaped not only by internal factors but also by sectoral interactions.
Toy et al. (Fri,) studied this question.