Stress test in Turkish banking sector

As a result of the Covid-2019 epidemic rapidly pervaded all over the world, it has been observed that the potential risks which were unlikely to occur, could dramatically affect the markets. In our thesis research, we try to analyse with regression analysis both how the Turkish Banking sector would respond to macroeconomic shocks and whether the Turkish Banking sector change by conducting stress testing in an economic model in which real profit is a dependent variable. Stress test was performed using Monte Carlo simulation with 10,000 scenarios. As a result of our thesis research, it has been observed that GDP, exchange rate and interest affect the net profit of banking sector. Furthermore, we have indicated the financial climate conditions that both increase the real profit of the Turkish Banking sector up to 144.11 percent and decrease the real profit of the Turkish Banking sector up to minus 53.83 percent. That is why our thesis research would provide an important contribution for those who want to invest in the banking sector in Turkey.