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Determinants of Capital Structure in Financial Institutions: The Case of Turkey

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  • Yakup Asarkaya
  • Serkan Özcan

Abstract

This study analyzes the determinants of capital structure in the Turkish banking sector. We propose an empirical model in order to identify the factors that explain why banks hold capital beyond the amount required by the regulation. We used a panel data set that employs bank-level data from the Turkish banking sector covering the period 2002–2006 and estimated the model with generalized method of moments (GMM). The findings of this study suggest that lagged capital, portfolio risk, economic growth, average capital level of the sector and return on equity are positively correlated with capital adequacy ratio and share of deposits are negatively correlated with capital adequacy ratio.

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File URL: http://www.bddk.org.tr/WebSitesi/turkce/Raporlar/BDDK_Dergi/3885makale5.pdf
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Bibliographic Info

Article provided by Banking Regulation and Supervision Agency in its journal Journal of Banking and Financial Markets.

Volume (Year): 1 (2007)
Issue (Month): 1 ()
Pages: 91-109

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Handle: RePEc:bdd:journl:v:1:y:2007:i:1:p:91-109

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Web page: http://www.bddk.org.tr/WebSitesi/turkce/Raporlar/BDDK_Dergi/BDDK_Dergi.aspx
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Related research

Keywords: Capital Adequacy; Turkish Banking Sector; GMM;

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References

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  1. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," Boston College Working Papers in Economics 545, Boston College Department of Economics, revised 14 Feb 2003.
  2. Jinyong Hahn & Jerry Hausman, 2002. "A New Specification Test for the Validity of Instrumental Variables," Econometrica, Econometric Society, vol. 70(1), pages 163-189, January.
  3. Allen N. Berger & Richard J. Herring & Giorgio P. Szegö, 1995. "The Role of Capital in Financial Institutions," Center for Financial Institutions Working Papers 95-01, Wharton School Center for Financial Institutions, University of Pennsylvania.
  4. Joseph G. Haubrich & Paul Wachtel, 1993. "Capital requirements and shifts in commercial bank portfolios," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 2-15.
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Cited by:
  1. Mehdi Mili & Jean-Michel Sahut & Hatem Trimeche, 2014. "Determinants of the Capital Adequacy Ratio of a Foreign Bank’s Subsidiaries: The Role of the Interbank Market and Regulation of Multinational Banks," Working Papers 2014-366, Department of Research, Ipag Business School.

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