Dynamics of bank profitability: Evidence from Turkey

Saniç, Yusuf Halit
Şendeniz Yüncü, İlkay
This study examines whether the capital adequacy ratio, which is calculated with risk- weighted assets, explains the bank profitability in Turkey, and whether profitability dynamics vary for different bank sizes. This paper also aims to examine the effects of international trade between the EU-28 and Turkey on bank profitability. Our bank profitability measures are; return on assets, return on equity, and net interest margin. Our results show evidence of a positive relationship between capital adequacy ratio and bank profitability. In addition, we observe that profitability dynamics differ for different bank sizes. We also document that openness to trade between EU-28 and Turkey has a positive and significant effect on bank profitability in Turkey.


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This study examines the effects of the exchange rate volatility and the firm-specific features representing the liquidity, profitability, and leverage performance of firms on excess stock returns for the manufacturing firms listed in Borsa İstanbul (BIST) using dynamic panel data model. The exchange rate volatility is modeled by single regime generalized autoregressive conditional heteroscedasticity (GARCH) models and Markov-switching GARCH (MSGARCH) models. The MSGARCH models show evidence that the evoluti...
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Within the Turkish banking system, systemic risk, which is defined as the propagation of a financial collapse occurred in one or more institutions to other institutions as a consequence of interconnectedness, has been examined with network analysis via the capital and liquidity channel of interbank system over the period from January 2009 to October 2014. Financial shocks of individual and multiple bank failures are simulated to measure the fragility and effectiveness of banks and peer groups. Simulation re...
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Citation Formats
Y. H. Saniç and İ. Şendeniz Yüncü, “Dynamics of bank profitability: Evidence from Turkey,” ODTÜ Gelişme Dergisi, vol. 48, no. 1, pp. 57–76, 2021, Accessed: 00, 2021. [Online]. Available: http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/1123/520.