Artikel

Testing the Factors that Determine the Profitability of Banks with a Dynamic Approach: Evidence from Turkey

The present study aims to identify the internal and external factors that affect the profitability of banks operating in Turkey. For this purpose, the study used data from 23 public, private, and foreign banks, covering the period from 2007 to 2020. Two dependent variables were used as the profitability indicators of banks, namely, the Return on Equity (ROE) and the Return on Assets (ROA). In order to increase the reliability of the models developed during the study, Dynamic Generalized Method of Moments (GMM) and Fixed Effect Model (FEM) were applied. Results of the analysis indicate a positive and statistically significant relation between inflation rate and GDP growth rate, and ROA and ROE. According to the results of GMM, there was a positive relation between ROA and ROE, and 1-year and 2-year lagged ROA and ROE. This situation may be explained by the fact that profits acquired in the Turkish banking sector are steady. ROA and ROE were observed to have a positive relation with inflation rate and economic growth rate. In other words, the increase in inflation rate and GDP growth rate positively affect profitability of public, private, and foreign banks.

Language
Englisch

Bibliographic citation
Journal: Journal of Central Banking Theory and Practice ; ISSN: 2336-9205 ; Volume: 12 ; Year: 2023 ; Issue: 1 ; Pages: 225-248 ; Warsaw: De Gruyter

Classification
Wirtschaft
Subject
Bank Profitability
Turkish Banking
Dynamic Approach

Event
Geistige Schöpfung
(who)
Doğan, Mesut
Yildiz, Feyyaz
Event
Veröffentlichung
(who)
De Gruyter
(where)
Warsaw
(when)
2023

DOI
doi:10.2478/jcbtp-2023-0010
Handle
Last update
10.03.2025, 11:44 AM CET

Data provider

This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.

Object type

  • Artikel

Associated

  • Doğan, Mesut
  • Yildiz, Feyyaz
  • De Gruyter

Time of origin

  • 2023

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