We Are Different: The Drivers of Asset Quality in Loan Type and Sectoral Breakdowns

Mehmet Selman Colak, Yavuz Kilic, Huseyin Ozturk and Mehmet Emre Samci

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: This study employs model averaging methods to analyze the determinants of non-performing loans (NPLs) in the Turkish banking sector. The characteristic drivers of NPL are examined separately for different loan types categorized by customer segments (consumer loans, corporate loans, SME loans, mortgage loans, credit cards, general purpose loans, vehicle loans) and sectors (manufacturing, agriculture, construction etc.). Our results confirm that asset quality, proxied by NPL ratio of different loan segments, and economic sectors present unique relations with macroeconomic and banking variables. We conclude that customized risk management practices may bring significant benefits given that credit risk in different subcomponents of the economy responds to macroeconomic and banking variables differently.

Keywords: NPL ratio; Loan segments; Emerging economies (search for similar items in EconPapers)
JEL-codes: E58 G10 G20 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-ara and nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:2504

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