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What Determines The Non-Performing Loans Ratio: Evidence From Turkish Commercial Banks

Author

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  • Fatih Macit

    (Department of Economics, Suleyman Sah University)

Abstract

In this paper I investigate the determinants of non-performing loans (NPLs) ratio for commercial banks in Turkey by incorporating bank specific and macroeconomic variables. I find that banks with a higher equity to total assets ratio and a higher net interest margin are expected to have a higher NPLs ratio whereas an increase in net loans to total assets ratio is expected to reduce the NPLs. The results also reveal that public banks and foreign banks are expected to have a higher NPLs ratio. In terms of macroeconomic variables GDP growth shows its effect on NPLs with a lag and a domestic currency depreciation is expected to deteriorate the loan portfolios of commercial banks.

Suggested Citation

  • Fatih Macit, 2012. "What Determines The Non-Performing Loans Ratio: Evidence From Turkish Commercial Banks," Journal Articles, Center For Economic Analyses, pages 33-39, June.
    • Handle: RePEc:cmk:journl:y:2012:p:33-39
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    File URL: http://journal.cea.org.mk/files/journals/1/articles/6/public/6-23-1-PB.pdf
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    References listed on IDEAS

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    2. Amir Hadziomeragic & Malgorzata Jakubiak & Nermin Oruc & Wojciech Paczynski, 2007. "Regional Free Trade Agreements of Bosnia and Herzegovina: analysis and policy recommendations," CASE Network Reports 0069, CASE-Center for Social and Economic Research.
    3. Predrag Bjelić & Danijela Jaćimović & Ivan Tašić, 2013. "Effects Of The World Economic Crisis On Exports In The Ceec: Focus On The Western Balkans," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 58(196), pages 71-98, January –.
    4. Ljiljana Pjerotić, 2008. "Trade Liberalization in the South East Europe Effects and Controversial Issues," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 55(4), pages 497-522, December.
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    Cited by:

    1. Cucinelli, Doriana & Battista, Maria Luisa Di & Marchese, Malvina & Nieri, Laura, 2018. "Credit risk in European banks: The bright side of the internal ratings based approach," Journal of Banking & Finance, Elsevier, vol. 93(C), pages 213-229.
    2. Sascha Tobias Wengerek & Benjamin Hippert & André Uhde, 2019. "Risk allocation through securitization - Evidence from non-performing loans," Working Papers Dissertations 58, Paderborn University, Faculty of Business Administration and Economics.
    3. Ghosh, Amit, 2015. "Banking-industry specific and regional economic determinants of non-performing loans: Evidence from US states," Journal of Financial Stability, Elsevier, vol. 20(C), pages 93-104.
    4. Hai Long Pham & Kevin James Daly, 2020. "The Impact of BASEL Accords on the Management of Vietnamese Commercial Banks," JRFM, MDPI, vol. 13(10), pages 1-13, September.
    5. Ghosh, Amit, 2017. "Sector-specific analysis of non-performing loans in the US banking system and their macroeconomic impact," Journal of Economics and Business, Elsevier, vol. 93(C), pages 29-45.
    6. Gamze Öztürk DANIŞMAN, 2018. "Determinants of Bank Stability: A Financial Statement Analysis of Turkish Banks," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(38).
    7. Laxmi Koju & Ram Koju & Shouyang Wang, 2018. "Does Banking Management Affect Credit Risk? Evidence from the Indian Banking System," IJFS, MDPI, vol. 6(3), pages 1-11, July.

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    More about this item

    Keywords

    Non-performing Loans; Turkish Banking Sector;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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