Comparing the performance of participation banks and deposit banks in Turkey through using CAMELS method

The banking sector, one of the main components of the financial system, contributes to economic development and growth through the efficient allocation of savings. Therefore, effective supervision of the banking sector, which has a critical role in the economic development of a country, is of great importance. The purpose of this study is to make a comparative analysis by measuring the performance of deposit banks and participation banks operating in our country on a group basis and to determine whether there is a difference between the financial characteristics and performances of the bank groups. In the study, the performance of participation banks and deposit banks operating in Turkey between the years 2006-2017 are compared through CAMELS analysis. The variables of the study consist of the ratios obtained by using financial information in the balance sheet and income tables of deposit and participation banks operating in the banking sector. With this analysis method, it is aimed to evaluate deposit and participation banks in terms of capital adequacy, asset quality, management quality, profitability, liquidity and sensitivity to market risks. It is thought that CAMELS performance appraisal method can explain the developments of the banking sector and it will be an effective way to prevent possible banking crises by acting as an early warning system in the financial system.