Market structure in Turkish banking system and optimal .scake for banks-a research for privayely owned deposit banks

This study aims at specification of the market structure of the turkish banking system and the effects of this structure on the performance (by profitability) of privately owned banks, as well as the specification of optimal scale for banks for the sub group. Ratio analysis technique i,s used and fundamentals of the microeconomic theory are encountered to define the market structure in the sector. A profit function is estimated to analyse the performance structure of banks and the market strustıre-bank conduct-bank performance (SCP) hypothesis is tested against the efficiency hypothesis. While estimating the multiproduct firm cost function in the form of translog forthe privately owned banks financial intermediation is assumed to underlie the bank production structure, i.e. banks are treated as firmswhich produce loans and deposit outputs by use of loans, deposits and labor as inputs. In both regression equations the period covers the quarters of the years 1990-1995 september. .The OLS estimation is utilized in the regression equations.