Micro and macro factors affecting the non-performing loan ratio and profitability of banks in the Turkish banking sector

The financial system is a system in which funds are exchanged within the framework of certain rules. Fund exchange is carried out through financial institutions between institutions with excess funds and institutions in need of funds. Banks are the most important intermediary institutions of the financial system. Banks can be grouped into three groups; deposit banks, participation banks, development and investment banks. Deposit banks are financial institutions that transfer the deposits they collect to real and legal persons in need. Banks aim to make a profit while carrying out these activities. Failure to pay the loans on time has a negative impact on the bank's balance sheets. Non-performing loans and profitability ratios are among the most important indicators of risk and performance in banks. The purpose of this study; To investigate the micro and macro factors affecting the profitability and non performing loan ratio of deposit banks operating in Turkey. In the study, three month data of deposit banks operating in Turkey between 2011 and 2023 were used. Parametric (linear) and non-parametric (non-linear) models were obtained by using ordinary least squares and regression spline methods as the analysis method. Key Words: Banking, Profitability, Non-Performing Loans, Smoothing Spline