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Determinants of Bank Profitability in Turkey: An Empirical Analysis on Types of Banking from 2002 to 2012

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  • Esref Savas BASCI

    () (Hitit University, Faculty of Economics and Adm. Sciences,)

  • Oznur SAKINC

Abstract

In this study, we investigate the determinants of banking profitability related to their financial statements. A profitable banking sector is better able effect to stability of the financial system. The profitability of a financial institution is affected by a lot of factors. These factors include elements internal to each financial institution and several important external forces shaping earnings performance. In this study we analyses effects from financial statements to their profitability of each types of banks. With this current emphasis on financial statements are very important to both managing future and making new decision to guide. In Turkey, during from 2002 to 2012 period, bank’s profitability approaches has been changed to new phenomenon. Because of regulative decisions and competitive market has to change profitability of banking sectors. It is therefore important to understand the determinants of banking sector profitability in Turkey between all types of banks. This is essentially important in the light of the above notable changes that have occurred in the operating environment of banks in Turkey. An overview of previous studies indicates various ways that profitability was examined. Some studies were country specific and few of them considered panel of countries reviewing the determinants of profitability. In this study we examines types of banks as follows: 3 banks in state-owned banks, 12 banks in Private banks, 6 banks in foreign banks which has a branches in Turkey. In total 21 banks and 3 types analyses with cross-sectional panel data method during the from 2002 to 2012 period. In this study, we obtained data from Income Statements and Balance Sheets. As a result of panel data regression are statistically significant which Interest Income / Total Income and Consumer Loan / Total Loan are highly important to estimate ROE than estimating ROA.

Suggested Citation

  • Esref Savas BASCI & Oznur SAKINC, 2014. "Determinants of Bank Profitability in Turkey: An Empirical Analysis on Types of Banking from 2002 to 2012," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 1(1), pages 32-36, December.
  • Handle: RePEc:icb:wpaper:v:1:y:2014:i:1:32-36
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    References listed on IDEAS

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    1. Astrid Matthey, 2010. "Do public banks have a competitive advantage?," The European Journal of Finance, Taylor & Francis Journals, vol. 16(1), pages 45-55.
    2. Shobhna Gupta & Jasminal Kaur, 2014. "A Comparative Study of the Performance of Selected Indian Private and Public Sector Banks," The IUP Journal of Bank Management, IUP Publications, vol. 0(2), pages 64-83, May.
    3. Alexei Karas & Koen Schoors & Laurent Weill, 2010. "Are private banks more efficient than public banks?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 209-244, January.
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    More about this item

    Keywords

    Determinants of Banking Sector; Profitability; Turkey Banking Sector;

    JEL classification:

    • P17 - Economic Systems - - Capitalist Systems - - - Performance and Prospects
    • P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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