The Determinants of Banking Sector Profitability in Turkey

M. M. Tuncer Caliskan and Hale Kirer Silva Lecuna
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M. M. Tuncer Caliskan: Bandirma Onyedi Eylul University
Hale Kirer Silva Lecuna: Bandirma Onyedi Eylul University

Business and Economics Research Journal, 2020, vol. 11, issue 1, 161-167

Abstract: Banking sector plays a crucial role in the financial system in terms of economic development of a country. The aim of this study is to investigate the determinants of the banking sector profitability in Turkey for the years between 1980 and 2017. We gather the data from the Turkish Statistical Institute (TurkStat) and The Banks Association of Turkey. In this context we use return on assets (ROA) and return on equity (ROE) as profitability indicators and form two models separately by taking them as dependent variables. We put both banking sector variables and control variables as independent variables. Within this framework we employ bank size, deposit conversion ratio, and liquidity as banking sector variables; whereas inflation rate, interest rate and exchange rate as control variables. To examine our models, we run a Regression Analysis. According to our findings, macroeconomic indicators such as inflation, interest rates and exchange rates play a significant role in shaping the performance of the banking system. However, banking sector variables such as assets, efficiency and liquidity are more crucial for profitability.

Keywords: Banking Sector; Profitability; Commercial Banks; ROA; ROE (search for similar items in EconPapers)
JEL-codes: C10 C22 G10 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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