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Sectoral Concentration in Loan Portfolio and Risk Relationship: An Analysis on The Turkish Commercial Banking Sector

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  • Batu TUNAY

Abstract

In this study, the relationship between credit risk with concentration of sectoral credits lent by commercial banks operating in Turkey is analyzed. In the analysis of quarterly data within the period 2002:4-2014:2, private, public and foreign banks are taken into account in separate groups. The estimations that use linear panel data method, showed that sectoral concentration of credit risk is increasing. By time, the ratio of risky loans to total loans decreased in private and public banks, same ratio increased in foreign banks. However, it was determined to be positive and strong relationship between the concentration of credit risk for all bank groups.

Suggested Citation

  • Batu TUNAY, 2015. "Sectoral Concentration in Loan Portfolio and Risk Relationship: An Analysis on The Turkish Commercial Banking Sector," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 9(1), pages 127-147.
    • Handle: RePEc:bdd:journl:v:9:y:2015:i:1:p:127-147
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    More about this item

    Keywords

    Credit Risk; Sectoral Concentration; Diversification; Panel Data;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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