Examination of the relationship between the market structure of the Turkish banking sector and the profitability of deposits banks

Profit is essential for banks, as it is for many businesses, in terms of their financial performance and sustainability of their existence. The profitability of banks, which are the driving force of the Turkish economy with their significant share in the financial system, is important for the effective and efficient functioning of the banking sector as well as the financial system. At this point, revealing the factors affecting the profitability of banks is especially curcial for sector representatives, regulatory and supervisory institutions and policy makers. The aim of this thesis is to examine the relationship between market structure, which is considered as one of the determinants of profitability and an indicator of the level of competition, and the profitability of deposit banks. For this purpose, the linkage between the indicator variable HHI (Hirschman-Herfindahl Index) and return on equity is examined by using panel data analysis method by including other factors that affect profitability in the model. The results of the analysis show that there is a positive and strong relationship between the return on equity, which is a profitability indicator, and the related index. In addition, other findings indicate that CPI (Consumer Price Index) and interest rate variables are also effective on profitability.