Banking Sector Performance in Turkey before and after the Global Crisis

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Iktisat Isletme ve Finans, 2015, vol. 30, issue 353, 45-74

Abstract: This paper tests the effects of the global crisis on the performance of Turkish banks by random effects model using bank-level data during 2002Q4-2013Q3. The dependent variables are financial ratios on capital adequacy, asset quality, liquidity, profitability, balance sheet and income-expenditure structure; while main determinants are FX open position, overhead costs, bank size, ownership, bank listing and bank age. Other determinants include growth, inflation, exchange rate, policy rate and required reserves, which capture the effects of macroeconomic conditions and monetary policy on bank performance. Estimation results suggest that the Turkish banking sector performance has changed after the crisis. This can be attributed to the increased effectiveness of the monetary policy in the post-crisis period. Hence, the new monetary policy framework, which addresses financial stability concerns, is observed to affect the banking sector in Turkey. Furthermore, macroeconomic conditions and bank-specific variables also influence the changing performance of the Turkish banks after the crisis.

Keywords: Global Crisis; Random Effects Model; Turkish Banking Sector; New Monetary Policy Framework; Financial Stability (search for similar items in EconPapers)
JEL-codes: C23 E44 G21 (search for similar items in EconPapers)
Date: 2015
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