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How does ownership structure affect the profitability of Turkish banks? A comparative analysis of determinants
Article | Year: 2024 | Pages: 337 - 361 | Volume: 48 | Issue: 3 Received: November 4, 2023 | Accepted: April 9, 2024 | Published online: September 3, 2024
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
|
Public banks
|
Domestic private banks
|
Foreign banks
|
All deposit banks
|
|
|
2002
|
2010
|
2021
|
2002
|
2010
|
2021
|
2002
|
2010
|
2021
|
2002
|
2010
|
2021
|
|
Average return
on equity (%)
|
50
|
17
|
15
|
20
|
18
|
20
|
33
|
17
|
19
|
23
|
18
|
18
|
|
Foreign currency
net general position / Equity (%)
|
2*
|
1
|
1
|
1*
|
0
|
10
|
4*
|
-1
|
9
|
0*
|
0
|
7
|
|
Average return
on equity (%)
|
16
|
23
|
6
|
16
|
18
|
18
|
6
|
11
|
17
|
8
|
18
|
14
|
|
Average return
on assets
|
2
|
2
|
0
|
2
|
2
|
2
|
1
|
1
|
2
|
1
|
2
|
1
|
|
Turkish lira deposits / Total deposits (%)
|
63
|
78
|
41
|
31
|
64
|
34
|
18
|
67
|
32
|
42
|
70
|
37
|
|
Turkish lira loans
/ Total loans (%)
|
75
|
79
|
69
|
34
|
65
|
62
|
44
|
82
|
58
|
43
|
72
|
64
|
|
Loans/Deposits
(L/D) (%)
|
22
|
70
|
88
|
43
|
90
|
89
|
73
|
106
|
89
|
35
|
80
|
89
|
|
Non-performing
loans (NPL) / Total Loans (%)
|
13
|
0
|
3
|
4
|
0
|
4
|
1
|
1
|
4
|
7
|
1
|
4
|
|
Interest income
/ Interest expenses (%)
|
131
|
184
|
147
|
144
|
200
|
186
|
234
|
252
|
209
|
137
|
202
|
170
|
|
Interest expenses
/ Total assets (%)
|
23
|
4
|
5
|
11
|
4
|
4
|
8
|
4
|
3
|
15
|
4
|
4
|
|
Interest income
/ Total revenue (%)
|
91
|
86
|
98
|
82
|
75
|
86
|
75
|
87
|
80
|
87
|
80
|
89
|
|
Interest expenses
/ Total expenses (%)
|
85
|
71
|
90
|
72
|
59
|
80
|
51
|
47
|
78
|
77
|
61
|
84
|
|
Liquid assets
/ Short-term liabilities (%)
|
56
|
45
|
24
|
80
|
57
|
34
|
80
|
62
|
42
|
74
|
54
|
32
|
|
Total loans /
Total assets (%)
|
14*
|
48
|
58
|
32*
|
52
|
54
|
39*
|
58
|
56
|
54*
|
48
|
56
|
|
Total deposits
/ Total assets
|
72
|
77
|
66
|
70
|
62
|
61
|
52
|
58
|
58
|
70
|
66
|
64
|
|
Net profit per
branch (million TL)
|
1
|
3
|
3
|
1
|
3
|
11
|
0
|
1
|
11
|
0
|
2
|
8
|
|
Employment (‘000)
|
40
|
47
|
62
|
67
|
84
|
66
|
5
|
42
|
52
|
118
|
173
|
180
|
|
Number of branches
per bank
|
673
|
915
|
1238
|
183
|
417
|
446
|
464
|
123
|
115
|
152
|
294
|
306
|
Sources: The Banks Association of Turkiye 2002, 2010, 2021; Banking Regulation and Supervision Agency (BRSA); Banking Sector Data; Banking System in Turkiye (from
1958 to 2021).
|
Notation
|
Definition
|
Source
|
|
ROE
|
Return on equity (Net income / Total equity)*100
|
TBA
|
|
EQUITY
|
The ratio of equity to total assets (Equity / Total assets)
|
TBA
|
|
NNI
|
Non-interest income (Fees and commission income / Total
assets)*100
|
TBA
|
|
CUR
|
Rate of capacity utilisation (%) (proxy for economic
growth on a monthly basis)
|
CBRT
|
|
RER
|
Real effective exchange rate (2003=100)
|
CBRT
|
|
INF
|
Inflation rate (%)
|
CBRT
|
|
SIZE
|
Logarithm of the ratio of assets by ownership to total
assets (%)
|
TBA
|
|
CREDIT/DEPOSIT
|
Loan-to-deposit ratio (Total loans / Total deposits)
|
TBA
|
|
Variable
|
N
|
Mean
|
Std. dev.
|
Min
|
Max
|
|
ROE
|
468
|
8.4
|
5.7
|
0.003
|
36.5
|
|
EQUITY
|
468
|
0.1
|
0.02
|
0.1
|
0.15
|
|
NNI
|
468
|
12.2
|
3.1
|
6.1
|
18.8
|
|
CUR
|
468
|
75.3
|
3.7
|
67.8
|
81.9
|
|
RER
|
468
|
95.1
|
18.4
|
53.5
|
126.5
|
|
INF
|
468
|
15.2
|
16.9
|
3.9
|
85.5
|
|
SIZE
|
468
|
13.3
|
0.8
|
11.5
|
14.9
|
|
CREDIT/DEPOSIT
|
468
|
1.1
|
0.2
|
0.5
|
1.2
|
|
|
ROE1
|
ROE2
|
ROE3
|
|
ROE1
|
1.000
|
|
|
|
ROE2
|
0.668
|
1.000
|
|
|
ROE3
|
0.826
|
0.908
|
1.000
|
|
Breusch-Pagan
test of independence: chi2(45) = 337.742
|
Pr = 0.000
|
|
|
Delta
|
P-value
|
|
∆
|
4.527
|
0.000
|
|
Adj-∆
|
4.665
|
0.000
|
|
Equation
|
RMSE
|
R2
|
Chi2
|
Probability
|
|
ROE1
|
0.989
|
0.717
|
59.07
|
0.000
|
|
ROE2
|
0.735
|
0.723
|
62.82
|
0.000
|
|
ROE3
|
0.739
|
0.716
|
51.78
|
0.000
|
|
Dependent variable
|
Independent variables
|
Coefficient
|
|
Public
|
Foreign
|
Domestic private
|
|
ROE
|
EQUITY
|
8.232
(5.542)
|
22.443***
(3.715)
|
9.377**
(4.101)
|
|
NNI
|
0.154**
(0.067)
|
0.029**
(0.015)
|
0.105***
(0.028)
|
|
CUR
|
0.049
(0.045)
|
0.077***
(0.018)
|
0.065***
(0.017)
|
|
RER
|
-2.159**
(1.036)
|
-3.135***
(1.353)
|
-3.047***
(1.026)
|
|
INF
|
-0.027***
(0.007)
|
-0.004*
(0.019)
|
-0.047**
(0.013)
|
|
SIZE
|
0.536**
(0.218)
|
-0.038
(0.112)
|
0.017
(0.272)
|
|
CREDIT/DEPOSIT
|
-2.053***
(0.725)
|
0.267*
(0.128)
|
-2.349***
(0.539)
|
|
Constant
|
3.428
(3.572)
|
14.761***
(4.551)
|
11.672*
(5.852)
|
|
Variable
|
Coefficient
|
Standard error
|
t-statistic
|
|
EQUITY
|
13.351
|
1.915
|
6.972***
|
|
NNI
|
0.096
|
0.025
|
3.884**
|
|
CUR
|
0.064
|
0.017
|
3.719**
|
|
RER
|
-2.780
|
0.663
|
-4.193***
|
|
INF
|
-0.026
|
0.008
|
-3.242**
|
|
SIZE
|
0.172
|
0.122
|
1.407
|
|
CREDIT/DEPOSIT
|
-1.378
|
0.304
|
-4.532***
|
|
Constant
|
9.954
|
2.743
|
3.629**
|
|
|
Fixed effects model
|
|
Dependent variable: ROE
|
Coefficient
|
Standard error
|
|
EQUITY
|
8.404
|
(7.357)
|
|
NNI
|
0.163*
|
(0.063)
|
|
CUR
|
0.052
|
(0.047)
|
|
RER
|
-1.003**
|
(0.312)
|
|
INF
|
-0.021***
|
(0.002)
|
|
SIZE
|
0.423*
|
(0.218)
|
|
CREDIT/DEPOSIT
|
-0.631**
|
(0.211)
|
|
Foreign
|
9.193*
|
(4.582)
|
|
EQUITY*FOREIGN
|
22.63***
|
(3.722)
|
|
NNI*FOREIGN
|
0.021*
|
(0.063)
|
|
CUR*FOREIGN
|
0.051**
|
(0.147)
|
|
RER*FOREIGN
|
-3.045*
|
(1.027)
|
|
INF*FOREIGN
|
-0.044**
|
(0.003)
|
|
SIZE*FOREIGN
|
0.219
|
(0.372)
|
|
CREDIT/DEPOSIT*FOREIGN
|
0.234*
|
(0.382)
|
|
Domestic
|
8.705*
|
(4.168)
|
|
EQUITY*DOMESTIC
|
9.412*
|
(0.482)
|
|
NNI*DOMESTIC
|
0.15
|
(0.081)
|
|
CUR*DOMESTIC
|
0.087*
|
(0.013)
|
|
RER*DOMESTIC
|
-3.025**
|
(0.947)
|
|
INF*DOMESTIC
|
-0.039*
|
(0.005)
|
|
SIZE*DOMESTIC
|
0.94
|
(0.958)
|
|
CREDIT/DEPOSIT*DOMESTIC
|
-2.969**
|
(1.358)
|
|
Constant
|
4.791*
|
(2.268)
|
|
Model specification
|
|
R2
|
71%
|
|
Overall F-stat/Wald
|
6.48***
|
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September, 2024
III/2024
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