Analysis of factors affecting bank profitability

Banks, which play a significant role in the Turkish banking sector, are an essential component of the economy. Profitability is linked to the stability of the banking sector's structure. Profitability is required for banks, like other businesses, in order to finance themselves and strengthen their capital structure. The issue of profitability in the banking sector is critical to the sector's survival. The factors determining the net profitability of the banking sector, which has become the most important dynamic of the financial system, are examined in the study. In this regard, data from Turkish banks from 2008Q1 to 2020Q4 were obtained from the World Bank, TUIK, and CBRT databases. The panel AMG method is used to determine the impact of the factors affecting the bank's net profitability. The variables discussed in the analysis are total assets (AKT), own funds (OKN), economic growth (GDP), deposit volume (MVD), loans (CRD), interest expenses (FGD), interest income (FGL), and inflation (ENF). The analysis determined a statistically significant and positive effect on equity, deposit volume, inflation variables, and the bank's net profitability. There is no significant effect on interest income, interest expenses, loans, economic growth parameters, or the bank's net profitability.