How Does Transparency Affect Bank Risk and Performance? Evidence from Turkey

Meryem ªahan, Ibrahim Halil Eksi and Nuri Hacievliyagil ()
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Meryem ªahan: Gaziantep University, Turkey
Ibrahim Halil Eksi: Gaziantep University, Turkey
Nuri Hacievliyagil: Inonu University, Turkey

Problemy Zarzadzania, 2022, vol. 20, issue 97, 148-168

Abstract: Purpose: The main objective of this study is to investigate the effect of transparency on the performance of banks, which are among the most important units of the financial sector. Methodology: The Generalized Method of Moments (GMM) analysis was applied using the annual data from 22 deposit banks operating in Turkey. Four models related to profitability, credit risk, deposits, and stock returns were established by calculating a transparency score derived on the basis of 106 criteria for each year and for each bank. Findings: According to the GMM results, it was observed that transparency, credit risk, and profitability were negatively correlated, while stock returns had a positive relationship. Research limitations: There are not enough public-traded banks, especially in the stock returns section. Although this research has the largest sample size among the studies conducted to date, all banks in Turkey could not be included in its scope. Value: The analysis reveals the importance of reporting and sharing information from banks. Banks should set a transparency criterion, and a transparency score should be established using the researched criterion.

Keywords: transparency; bank risk; financial performance; GMM (search for similar items in EconPapers)
JEL-codes: G21 G32 G34 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sgm:pzwzuw:v:20:i:97:y:2022:p:148-168

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