The Journal of Corporate Governance, Insurance, and Risk Management (JCGIRM).2021, Volume 8, Series 1
The Determinants of Profitability of Large-Scale and Small-Scale Turkish Deposit Banks
Pelin KAYA,b*, Şenol BABUŞÇUa , Adalet HAZARa
a Prof. Dr. Başkent University, Department of Banking and Finance, Turkey
b PhD Student, Başkent University, Department of Banking and Finance, Turkey
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| This paper aims to explore the bank-specific and macroeconomic determinants of the banks’ profitability by dividing the Turkish deposit banks into large-scale and small-scale entities. For this purpose, panel data analysis was applied using a fixed effects model, based on quarterly data for the period from March 2009 to September 2020 for 24 deposit banks. Return on assets and return on equity are used as a measure of the banks’ profitability. According to the results, the determinants of profitability differ between large-scale banks and small-scale banks. With respect to the bank-specific determinants, the findings show that the equity/assets, deposits/assets and liquidity ratio have a significant impact on the profitability of large-scale banks, whereas they have no relationship with the profitability of small-scale banks. The profitability of large-scale banks is negatively affected by their asset quality ratios. On the other hand, while the ratio of loans to total assets has no impact on the profitability of small-scale banks, the non-performing loan ratio has a positive impact. While the asset size and income-expense ratios have positive and significant impacts on the profitability of small-scale banks, they exhibit no relationship with the profitability of large-scale banks. With regard to macroeconomic indicators, small-scale banks’ profitability is negatively affected by economic growth, whilst large-scale banks are not. This study is aimed to contribute to the literature by analysing the determinants of Turkish deposit banks’ profitability under the classification of large-scale and small-scale banks. | Keywords: Bank Profitability, Determinants, Large-Scale Banks, Small-Scale Banks, Panel Data Analysis
*Corresponding author: pcelik02@yahoo.com (Pelin Kaya) Article history: Received 08.01.2021 Revised 21.02.2021 Accepted 24.03.2021 DOI: https://doi.org/10.51410/jcgirm.8.1.1
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Cite Article (APA): Kaya, P. Babuscu, S., and Hazar, A. 2021. The Determinants of Profitability of Large-Scale and Small-Scale Turkish Deposit Banks.The Journal of Corporate Governance, Insurance, and Risk Management (JCGIRM).2021, Volume 8, Series 1, Pages 1 -18
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