Makroeconomic effects of non-performing loans in Turkish banking sector

The credit provided by the banks with surplus funds to those who request funds is among the basic functions of banking. Loans, which affect both the supply and demand aspects of the economy, have a high profit return if they are paid on time and carry a high risk for banks if they are not paid on time. For this reason, it is of great importance for banks to prevent the loan from falling into follow-up. The increase in the non-performing rate of the loans extended by the banks is a negative situation for the bank extending the loan, as well as the negative conditions of the banks affect the country's economy negatively. In the thesis, which investigates the effect of macroeconomic factors, which are indicative for the country's economy, on the non-performing of loans, data belonging to the quarter periods of 2005Q1-2020Q4 were used. For the analysis of these data, ARDL Boundary Test Model was preferred. The aim of the study is to investigate the effect of macroeconomic indicators that help analyze the financial situation of the country's economy on non-performing loans. As result of the analyse that 2005Q1-2020Q4 data is used; non-performing loans affects GDP and inflation rate in long term positively; interest rate and unemployment have no effect on NPL.