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Classification of Turkish Commercial Banks Under Fuzzy c-Means Clustering

Author

Listed:
  • Ismail Hakki GOKGOZ
  • Fatih ALTINEL
  • F.Pinar Yetkin GOKGOZ
  • Ilker KOC

Abstract

As the major actors of credit system, banks have a great importance not just for financial system but also for the whole of economy. Thus, financial soundness o f banks, affected by many financial risks, should be monitored closely. This study focuses on classification of the deposit and participation banks of Turkey regarding their soundness. Financial Stability Indicators (FSIs) are used to attain this goal. Research method is mainly based on f uzzy c - means clustering method which relies on fuzzy logic. The results show that the participation banks are grouped together in the same cluster. Also, Denizbank A.Þ., Finansbank A.Þ., Yapý ve Kredi Bankasý A.Þ. and Türk Ekonomi Bankasý A.Þ., having similar characteristics regarding ownership and scope of financial services, are found to be grouped together in all periods under consideration. Moreover, it has been seen that size is not the most decisive factor for classification purposes.

Suggested Citation

  • Ismail Hakki GOKGOZ & Fatih ALTINEL & F.Pinar Yetkin GOKGOZ & Ilker KOC, 2013. "Classification of Turkish Commercial Banks Under Fuzzy c-Means Clustering," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 7(2), pages 13-36.
    • Handle: RePEc:bdd:journl:v:7:y:2013:i:2:p:13-36
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    References listed on IDEAS

    as
    1. Chen, Liang-Hsuan & Chiou, Tai-Wei, 1999. "A fuzzy credit-rating approach for commercial loans: a Taiwan case," Omega, Elsevier, vol. 27(4), pages 407-419, August.
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    More about this item

    Keywords

    Financial Risk; Financial Soundness Indicators; Turkish Commercial Banks; Data Clustering; Fuzzy c-Means Clustering.;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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