The Place of Non-performing Loans in the Turkish Banking Sector

Abstract

In the banking sector, the size of loans and their problems are of great importance in all periods. The share of nonperforming loans in total loans has a strong influence on the asset quality of banks, the extent to which the real sector impact is affected, the extent to which it affects profitability and how it contributes to capital adequacy.The higher the rate of problematic loans for a bank, the lower the risk and the lower the risk. Therefore, a credit policy in order to reduce the share of troubled loan rates in total loans within the Turkish banking sector will be a factor to increase their financial strength.In this study, the definition and scope of empirically problematic loans will be discussed in detail. Then, the effects of the non-performing loans on the banking sector will be presented. These headings include the effects of nonperforming loans on capital adequacy, their effects on the real sector, their impact on asset quality and their impact on profitability. It is seen that the banks with high rate of loans have disrupted the asset quality due to the inability to collect the loans, and it is seen that they are directed towards entering into a negative thought in the banks against the real sector. The height of the rate also negatively affects the capital adequacy of Turkish banks and their profitability.