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Determinants of Liquidity in the Turkish Banking Sector: An Assessment of Bank-Specific Factors

Author

Listed:
  • Aysegul ERTUGRUL
  • Ceren Aycan GUREL HOSHANLI

Abstract

The liquidity of banks, which are among the most fundamental building blocks of the financial system, is of great importance. Liquidity problems in the banking sector can cause economic crises by reyting a domino effect on the real sector. The liquidity of the banking sector is affected by both macroeconomic variables and factors specific to banks. This study utilises data obtained from the balance sheets of public, private, and foreign-owned banks for the years 2014-2024, as classified by the Banking Regulation and Supervision Agency, and evaluates eleven independent variables that may affect the liquidity-dependent variable of banks. Panel regression analysis was applied in the study, and it was concluded that the variables with a positive effect on the liquidity of banks were Equity/ Total Assets (OTA), bank size expressed as the Logarithm of Total Assets (TA), and Total Deposits/Total Assets. At the same time, it was observed that the variables with a negative effect on the liquidity of banks were Fixed Assets/Total Assets (DATA), Total Loans/Total Deposits (TKTM) and Total Loans/Total Assets (TKTA). The results also indicate that profitability variables (ROA, ROE) and the capital adequacy ratio (CAR) have no significant effect on liquidity.

Suggested Citation

  • Aysegul ERTUGRUL & Ceren Aycan GUREL HOSHANLI, 2025. "Determinants of Liquidity in the Turkish Banking Sector: An Assessment of Bank-Specific Factors," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 19(2), pages 242-258.
    • Handle: RePEc:bdd:journl:v:19:y:2025:i:2:p:242-258
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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