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Bank-specific determinants of deposit banks profitability in a highly dollarised economy: evidence from Turkey

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  • Haşmet Sarıgül

Abstract

The purpose of this study is to explore banks' profitability determinants in highly dollarised Turkish economy. A panel autoregressive distributed lag model with quarterly data on Turkish deposit banks for the period 2005Q1–2021Q4 is used to analyse long- and short-run relationships between the variables. All the dollarisation-related variables in the estimation model – deposit dollarisation, foreign currency open position, and foreign currency financial derivatives – appear to be statistically significant factors that adversely impact the profitability of Turkish deposit banks in the long-run. The estimation model also includes a set of other bank-specific variables, among which the off-balance engagements, overhead rate, market share, and capital-to-asset ratio are significantly associated with the profitability of Turkish deposit banks. The changes in the net total loans/assets, loan loss provisions/loans, and loan loss provisions/assets variables have insignificant impacts on the profitability.

Suggested Citation

  • Haşmet Sarıgül, 2025. "Bank-specific determinants of deposit banks profitability in a highly dollarised economy: evidence from Turkey," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 15(6), pages 758-774.
    • Handle: RePEc:ids:afasfa:v:15:y:2025:i:6:p:758-774
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