Bank performace analysis in Turkish banking sector

The early stages of the banking and financial system in Turkey were the the most difficult due to insufficient capital and unfavorable starting conditions, but nevertheless the beginning of a new economic system era. The first bank established in the Ottoman Empire was "Istanbul Bank" in 1845. In the following years, new banks with foreign capital were established, however due to inexperienced management of the period these banks could not carry on their activities. Thanks to a few cautious decisions in the early years of the Republic which became a starting point for the development of the sector. As a result of the political and economic crises in the country in 2001, once again, the banking sector witnessed a serious recession. While trying to keep the effects of the crisis under control, another crisis arose. Because of the new financial crisis that broke out in the United States of America in the last months of 2008 and negatively affected many countries, the country's Gross Domestic Product decreased rapidly, inflation and interest rates fluctuated wildly, savings deficit emerged in the public and private sectors, budget deficit increased, negative expectations emerged and the risks increased. As the Turkish Lira value negative expectations arose. After the restructuring period that started in the beginning of 2009, even though slight, the banking sector had positive developments. In this context, after the effects of the financial crisis in 2008, it is necessary to investigate and bring to light the factors that determine the profitability and performance of the Turkish Banking Sector, and then analyze the effect of these factors. Therefore, the factors affecting the performance of vii commercial banks in the Turkish Banking Sector in the last 10 years should be identified and the level of the performance of the identified factors need to be analyzed and compared between the public, private and foreign bank groups. In this study, the analysis focuses on the factors affecting the performance of commercial banks operating in Turkey for 2010-2020 period. After applying the Panel Data Analysis using quarterly data set of 15 commercial banks (3 public, 6 private and 7 foreign), a comparison was done according to the types of banks. The analysis results show that bank specific factors have more impact on bank profitability than macroeconomic factors. The reason for working with 15 banks is that some of the commercial banks operating in the Turkish Banking Sector between the years 2010-2020 were not operational and/or the data was not available. In the study conducted to determine the factors affecting the profitability of banks, it was concluded that bank specific variables such as asset growth rate, non-interest incomes, interest incomes, interest expenses, loans and equity, and external variables such as inflation have significant effects on the profitability of banks.