Development of banking system in Turkey: Resource management and profitability in the banking system

The financial system is a structure formed as a result of a combination of multiple factors that contribute to the fund supply and accumulation, affecting the fund flows from the surplus economic units to the deficit segments. This structure has significant effects on the process of transforming savings into investments in an economy. In addition to increasing the quantitative size of a financial system in total economy, its qualitative development refers to financial development. When measuring the concept of financial development, it is observed that the criteria that are evaluated mostly from a quantitative point of view are discussed. The transfer of funds from surplus units in the economy to units in need of funds is provided by financial instruments, financial markets, financial intermediaries. All of these make up the financial system. Banks, especially commercial banks are the most important actors of the financial system. The objective of profit maximization is to reduce the cost of the resources expected by the shareholders, especially shareholders who provide equity, and increase the net interest margin and profit by raising the return on the assets. In order to achieve this goal, they also need to establish an effective active passive management. Asset and liability management is in some sense the management of the bank. In particular, liquidity risk arising from maturity mismatch, as well as a number of risks such as market (interest rate and exchange rate) risk, credit risk, operational risk, necessitates banks to establish an effective risk management function. One of the most effective instruments that banks apply to IS fund Transfer pricing, while establishing an effective active passive and risk management function. With this application, the most important units of the banks that generate profits, especially the branches, are directed to collect funds and make loans in accordance with the bank policies, while profitability performances can be measured.