Foreign Bank Penetration and the Domestic Banking System: Empirical Evidence from Turkey Based on the VAR Approach

Dervis Kirikkaleli

Acta Oeconomica, 2016, vol. 66, issue 1, 79-105

Abstract: I seek to investigate the relationship, if exits, between foreign bank penetration (FBP) and the determinants of bank performance, namely domestic bank assets (DB), domestic credit (CREDIT), and banking profitability (PRO) in Turkey using quarterly data from 1994Q1 to 2009Q4, while controlling for GDP and the event of the 2001 financial crisis. Using the Granger causality, impulse response function and variance decomposition, the short run dynamics are examined. The outcome of the Granger causality test indicates that there is unilateral causality, which runs from domestic bank assets to FBP at the 10% level. Moreover, I also find feedback causality between FBP and CREDIT at the 5% level. By employing impulse response functions, my findings reveal that rising foreign bank assets in Turkey tend to increase domestic bank assets and credit availability in short run, and vice versa . Surprisingly, no significant impact of FBP on profitability in the banking sector is observed.

Keywords: foreign bank penetration; VAR; time series modelling; domestic banking; Turkey (search for similar items in EconPapers)
JEL-codes: C22 F23 G21 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.akademiai.com/doi/pdf/10.1556/032.2016.66.1.4 (application/pdf)
subscription

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aka:aoecon:v:66:y:2016:i:1:p:79-105

Ordering information: This journal article can be ordered from
Akadémiai Kiadó Zrt., P. O. Box 245, H-1519 Budapest, Hungary
https://akjournals.com/

Access Statistics for this article

Acta Oeconomica is currently edited by Mihályi, Péter

More articles in Acta Oeconomica from Akadémiai Kiadó, Hungary
Bibliographic data for series maintained by Kriston, Orsolya ().