Bank-specific determinants of deposit banks profitability in a highly dollarised economy: evidence from Turkey

Haşmet Sarıgül

Afro-Asian Journal of Finance and Accounting, 2025, vol. 15, issue 6, 758-774

Abstract: The purpose of this study is to explore banks' profitability determinants in highly dollarised Turkish economy. A panel autoregressive distributed lag model with quarterly data on Turkish deposit banks for the period 2005Q1–2021Q4 is used to analyse long- and short-run relationships between the variables. All the dollarisation-related variables in the estimation model – deposit dollarisation, foreign currency open position, and foreign currency financial derivatives – appear to be statistically significant factors that adversely impact the profitability of Turkish deposit banks in the long-run. The estimation model also includes a set of other bank-specific variables, among which the off-balance engagements, overhead rate, market share, and capital-to-asset ratio are significantly associated with the profitability of Turkish deposit banks. The changes in the net total loans/assets, loan loss provisions/loans, and loan loss provisions/assets variables have insignificant impacts on the profitability.

Keywords: dollarisation; profitability; deposit banks; panel data; Turkey. (search for similar items in EconPapers)
Date: 2025
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