Examination of the relationship between non-performing loans and macro-economic variables in banking sector: The case of Turkey (2003-2020)

Although loans are a profitable product for banks, they inherently contain an element of risk. The financial sector in terms of the fact that a loan transferred to the economy is not paid in due time and becomes problematic, firstly affecting the bank that made the loan and then other banks. On the other hand, it affects the real sector in terms of reducing the amount of loan to be transferred to the economy and increasing the cost of loan. In other words, the existence and control of non-performing loans is very important for the activities of both the banking sector and the real sector. In this study, the relations between the amount of non-performing loans, real effective exchange rate, inflation rate, economic growth and interest rates were analyzed by ARDL analysis method. It covers the periods from 2003;Q1 to 2020;Q4. As a result, It has been determined that other variables other than the inflation rate affect non-performing loans.