Relationship between digital transformation and profitability for Turkish deposit banks: An empirical evidence from Türkiye

The aim of this thesis is to evaluate relationship between digital transformation and profitability for Turkish deposit banks by analyzing effect of some bank specific factors that are related to digitalization and profitability. The research question of the study is that whether digital transformation has an impact on profitability or not for Turkish deposit banks. Multiple time series regression analysis with ARDL (Auto Regressive Distributed Lag) technique was conducted for the base and alternative models in the study. Quarterly data for Turkish deposit banks operating between January 2007 and April 2023 was collected form the website of Banking Regulatory and Supervisory Authority of Türkiye (BRSA) and the website of The Banks Association of Türkiye (TBB). Rate of Return on Asset (ROA), Operational Expense to Asset (OPEREXP), Number of Active Mobil Customer (MOB), Number of Active Internet Customer (INT), Number of Branch (NOB), Number of Staff (PEN), Number of ATM (NATM), Personal to Branch (POB) were chosen as dependent and independent variables for the models. The empirical results shows that there is a significant and positive relationship between digital transformation process and profitability of the Turkish deposit banks for the given period. This information may be beneficial for the banks, regulators, technology firms operating in financial sectors, investors, and policy makers to evaluate their current positions and future perspectives. It has an also good potential to give a valuable insight for future academic works.