An evaluation of the financial performance of deposit banks and participation banks according to the criteria of asymmetric information

Asymmetric information theory has a strong influence not only over the fields of insurance, health, consumption, politics, and media but also over banking, which is a sector that contributes to a country's economy. The present study aims to empirically analyse the effects of asymmetric information criteria on the financial performance of deposit banks and participation banks in Turkey, and to determine whether the financial statement and balance sheets of these two types of banks and the variables related to asymmetric information theory significantly correlate. The study sample was composed of deposit and participation banks' data from the years 2013-2019, excluding development banks and investment banks. Empirical analyses were conducted through correlation, regression, and panel data analysis methodology, which looked into all of the banks included in the sample as well as deposit banks and participation banks as separate groups, taking the financial statement indicator of total capital to total assets ratio as the dependent variable, and the factors of consumer confidence index, real sector confidence index, and the BIST-100 index, which are thought to influence bank financial statement and balance sheets according to the asymmetric information theory, as the independent variables. The findings indicated that the relationship between total capital to total assets ratio of deposit and participation banks and consumer confidence, real sector confidence, and the BIST-100 indices varied according to time and conjunctural developments. In addition, the variables of asymmetrical information theory were found to influence these two types of banking. Due to the relatively limited literature examining deposit banks and participation banks within the framework of asymmetric information theory, it is hoped that this study could be beneficial to the scientific literature on the subject and to the development of participation banking in particular.