Analysis of the Effects of Inflation, Cash Ratio, and Credit Deposit Ratio on Bank Performance

Nilgun Karadayi
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Nilgun Karadayi: Baskent University

A chapter in Transformational Trends in Finance, Banking, and Economics, 2025, pp 47-68 from Springer

Abstract: Abstract The purpose of this chapter is to investigate the effect of cash ratios and credit deposit ratios of private and public capital deposit banks operating in Turkey on the asset profitability of these banks. Panel data analysis was conducted using R-Studio Program with annual data covering the period 2012 and 2022. According to the analysis results, the effect of cash ratio and loan-to-deposit ratio on average asset profitability was found to be positive but statistically insignificant. The cash ratio and loan-to-deposit ratio are not a significant determinant of return on assets in Turkish banks. The effect of the inflation rate on average return on assets is positive and statistically significant. Cash ratio, loan-to-deposit ratio, and inflation rate simultaneously affect the bank’s performance. The impact of inflation on banks’ return on assets depends on their ability to manage the various challenges and opportunities presented by inflationary pressures. In an inflationary environment, operational efficiency, pricing strategies, as well as successful risk management are of great importance for banks to maintain or improve their asset profitability.

Keywords: Cash ratio; Inflation; Loan-to-deposit ratio; Return on Assets (ROA) (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-031-81532-4_3

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DOI: 10.1007/978-3-031-81532-4_3

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