Turkish banking sector performance analyses after the 2001 crisis

This thesis contributes to the weaknesses and strengths of the banking sector in Turkey. Performance analyses (DuPont analysis, CAMELS rating and Data Envelopment Analysis) are done by using quarterly data from 2001 to 2015. The effects and results of policies implemented after the 2001 crisis are investigated in line with solid banking sector construction for the European Union membership procedure; goals and targets of 10th Development Program and for the Istanbul International Finance Center project. In general, due to financial recovery maintained after the 2001 economic crisis, banking industry has shown improvements and has become stronger from the beginning of the millennium. In order to maintain more solid and sound sustainable system, successful policies must continue, especially in the banking sector asset quality and liquidity management areas. Also, supervisory transparency should be increased, even if it may embrace negative effects on financial actors. Even so, traditional ratio analyses are found to be consistent with advanced models. Managerial positions of banks in the sector are found in a good state, but it is observed that a requirement for adequate risk management department still continues as strong is an evidence on skimping hypothesis of NPL's. State owned deposit banks in the Turkish banking sector are performing better than their competitors but they are not in their best state in all measures. This should not mean that crowding out foreign banks out of the system would result in better overall assessment. Although the performance gap between the analyzed units have converged in time. Turkish banks are observed to have a lower performance in managing asset quality as well as vulnerability to market risk than foreign banks.