Abstract
The crises that are frequently observed in the banking industries of emerging markets which affect banks’ profits necessitate regulations and supervision of these markets. This paper investigates the determinants of Turkish banks’ profits and the effects of the regulations implemented in this industry on profits. In this research, 468 firm year observations for 36 Turkish banks for the period 1995-2007 were used and analyzed with Prais-Winsten regression method. The empirical findings of the study show positive and statistically significant relations between capital, size, offbalance sheet transactions, liquidity and loans and performance and negative and statistically significant relations between quality of loans, concentration and performance.
Highlights
In the last twenty years in the global finance industry there have been significant developments in the areas of operations, regulations, technological innovations and globalization in the financial markets
There are many studies regarding the determinants of banking profits, the relations between banking regulations and bank profits have not been investigated
The model located in the first column of the table covers the whole sample, while the model for the 1995-2000 pre-Banking Regulation and Supervision Agency (BRSA) regulations period is presented in the second column and after the banking crisis time model for the 2001-2007 post-BRSA regulations period is presented in the third column
Summary
In the last twenty years in the global finance industry there have been significant developments in the areas of operations, regulations, technological innovations and globalization in the financial markets. The banking system, which is the most important element of the finance industry in Turkey, and its profits were significantly affected by these developments as they were by the crisis experienced in the country. BRSA has an important role to play in keeping the Turkish banking sector strong and healthy. It is the guiding body in ensuring the application of corporate management and risk management principles in the Turkish banking sector, especially in increasing capital adequacy and profitability. There are many studies regarding the determinants of banking profits, the relations between banking regulations and bank profits have not been investigated. It is intended that this study will shed light on the literature related to this topic
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