Intersectoral linkages among non-performing loans

Bank loans are known as the most basic element for the advancement of markets and sectors and the turning of economic wheels. The existence of bank loans in different sectors or business sectors is of high importance, and the non-payment of these loans creates a great problem for the economic functioning. This unpaid loan is defined as a non-performing loan. The existence of unpaid loans not only affects the economic functioning, but also emerges as a situation in which market reliability is damaged on a sectoral basis. Loans of banks or financial institutions play a critical role in order to keep the economic wheels turning in free market conditions in Turkey. For this reason, it is possible to easily say that loans serve as a great support at some point. However, in countries with sensitive economies such as Turkey, non-performing loans cause the functioning of the markets to deteriorate and economic crises to arise. In this sensitive market environment, the risks of the sectors in benefiting and repaying bank loans are related. Methodologically examining this relationship in the light of statistical data is the healthiest method. In this work we examine whether there is an intersectoral relationship among NPL ratios of bank in Turkey, and if there is, whether this relationship depend on the bank type. We found that there are strong correlations among the NPL ratios of various sector and bank type seems to matter in intersectoral relationships during our sample period 2007-2022.