The Structure of the Turkish Banking Sector Before and After the Global Crisis

The Structure of the Turkish Banking Sector Before and After the Global Crisis

Title:

The Structure of the Turkish Banking Sector Before and After the Global Crisis

Number:

14/29

Author(s):

Aytül Ganioğlu, Vuslat Us

Language:

English

Date:

August 2014

Abstract:

This paper tests the effects of the global crisis on the structure of the Turkish banking sector using bank-level data during 2002Q4-2013Q3 period and employing random effects model. The selected dependent variables are financial ratios on capital adequacy, asset quality, liquidity, profitability, balance sheet and income-expenditure structure; while main determinants are bank-specific control variables on overdue loans, overhead costs, bank size and FX open position as well as dummy variables for bank age, bank listing and ownership. Other determinants include growth, inflation, policy rate, exchange rate and required reserves, which capture the effects of monetary policy and macroeconomic conditions on bank structure. Estimation results suggest that the structure of the Turkish banking sector has indeed changed after the global crisis. This result can be attributed to the increased significance of the monetary policy and changing macroeconomic conditions in the post-crisis period. Meanwhile, bank-specific determinants, which are important before the crisis, are found to have an even accentuated effect on the structure of Turkish banks in the aftermath of the global crisis. For refinement of these results, future research may elaborate on how ownership matters with respect to the changing structure of the Turkish banking sector and may analyze whether banks respond assymetrically to the global crisis. Prospective studies may also examine the individual aspects of this changing structure. In this regard, profitability and bank lending behavior stand out as major issues to be explored further.

Keywords:

Global crisis, Turkish banking sector, Random effects model, Monetary policy, Ownership, Profitability.

JEL Codes:

C23; E44; E52; G01; G21

The Structure of the Turkish Banking Sector Before and After the Global Crisis
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