DETERMINANTS OF PROFITABILITY IN THE TURKISH DEPOSIT BANKING SECTOR: PERIOD 2010-2015

Abstract

The aim of this study is to analyse the basic factors that determine the profit levels of deposit banks operating in Turkey. The variables that are expected to affect the profitability of 23 deposit banks that operate in Turkey between 2010 and 2015 are classified as bank specific, sector specific, and macroeconomic fundamentals specific variables and the model is estimated by the System Generalized Method of Moments Procedure. The findings suggest that the profitability level of the sector is affected positively by the asset size and negatively by credit risk and the ratio between the credits and assets. The findings also reveal that profitability is affected positively by economic growth rate and the improvements in budget balance and negatively by monetary growth rate and the concentration rate of the sector