Analysis of profitability of banks in Turkey

The size of the activities of banks and their development over the time are closely related to determining the size and direction of the country's economy. In line with the functions they undertake, banks meet the fund demands of firms and households, in other words, especially their loan needs. On the other hand, within the framework of the regulations made, the main resources of the banking sector, where fund owners can safely keep their savings, is the supply of funds. Accordingly, banks contribute greatly to the development of the national economy by supporting investments within the framework of their dematerialized money creation function. The financial soundness and performance of such important banks are among the factors followed by the relevant authorities and investors. The most important indicators of the financial performance of banks are the development of their inter-period profits and the share of these profits in the total asset size of the shareholders. In other words, the higher the level of profit on assets owned and equity, the higher the performance level of that bank and therefore the auto finance. In this study, bank-specific and macroeconomic factors affecting return on assets (ROA) and return on equity (ROE), which are indicators of banks' profitability, are examined. Within the scope of the research, importance has been given to conducting various tests in terms of the effect of independent variables on profitability, which were among the determinants of profitability in previous studies in the literature. The time frame of the study was determined as the years 2008-2018, and its scope consists of deposit banks whose data can be accessed at certain periods without interruption. Within these constraints, the variables of the study are the annual data of 23 deposit banks and the annual change of macroeconomic variables. The model of the research was determined as panel data analysis according to the data set. Two different models, in which ROA and ROE are dependent variables, were created by selecting the appropriate model with the tests performed before panel data analysis. When the results of the model were evaluated, it was concluded that the significance levels of the variables specific to banks were higher, but macroeconomic variables were effective on the dependent variables. Details of the study are in the relevant section.