Determinants of profitability in banking sector: An application on the Turkish banking system

In this thesis study, the factors affecting profitability of banks has been investigated for the deposit banks of Turkish Banking Sector which have operated continuously in the Istanbul Stock Exchange over the period of 2006-2016. In this context, return on equity (ROE) and return on assets (ROA) of the banks have been analyzed by panel data analysis method, using quarterly data of various microeconomic variables (factors specific to the banking sector). Based on the findings of the study, it was determined that there was a significant and positive relationship between return on equity and Equity Growth and Loan Growth ratios. On the other hand, it was concluded that return on assets has been affected by Equity Growth ratio positively while by Non-Interest Revenues / Total Assets and Loan Growth ratios negatively. Furthermore, in the results of the analysis, it was determined that the most important explanatory variables of return on equity and return on assets are Equity Growth ratio and Non-Interest Revenues / Total Assets ratio respectively.