Influencing Factors of Net Interest Margin in Turkish Banking Sector

Serhat Yuksel and Sinemis Zengin
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Serhat Yuksel: Head of the Department of International Trade and Management, Konya Food and Agriculture University, Konya, Turkey,
Sinemis Zengin: Ph.D. in Banking, Turkey

International Journal of Economics and Financial Issues, 2017, vol. 7, issue 1, 178-191

Abstract: The aim of this paper is to define the influencing factors of net interest margin in Turkish banking sector. Within this scope, the effects of 14 explanatory variables on net interest margin were analyzed. Moreover, quarterly data for the period between 2003 and 2014 was used in this study. After that, we created a model by using multivariate adaptive regression splines method so as to illustrate the relationship. The major finding in this study is that net interest margin is negatively related with non-interest income, non-performing loans, total assets and exchange rates. According to these results, it was determined that banks should focus on the quality of the assets in order to increase net interest margin. In addition to this situation, volatility in exchange rates should also be taken into the consideration by the banks for this situation.

Keywords: Banking; Net Interest Margin; Multivariate Adaptive Regression Splines; Turkey (search for similar items in EconPapers)
JEL-codes: E43 G2 G21 O16 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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