Measuring the resilience of banks operating in Turkey against economic crises by stress test method

In the study, separate tests were applied in 2 stages to measure the resilience of banks operating in Turkey against crises in case of possible economic crises, using the stress test method. First, the CAMELS Analysis was applied, which was accepted by international economic units and used frequently. The CAMELS Analysis examined 19 years of performance between 2002 and 2020. In the analysis, the general banking sector and bank groups were evaluated comparatively in 4 main groups: Private with Domestic Capital, Participation Banks, Private with Foreign Capital, and Public Capital. Since the analysis covers a long period of 19 years, it has enabled the effects of the global and local crises experienced during this period to be better determined in the banking sector. After the crisis in the banking sector in 2001, the negative effects of the crisis began to be overcome with the establishment of the BRSA (Banking Regulation and Supervision Agency). In addition, when the balance sheets of banks are examined, it is seen that there has been a great improvement. As a result of the CAMELS analysis, Private Banks with Domestic Capital ranked first among the bank groups with their successful performance, especially in the components of Profitability, Management Quality, and Sensitivity to Market Risk. It can be said that the recent increase in the follow-up ratio in State-owned Banks has a more fragile image compared to Domestic Banks with its effects on management quality and profitability. However, this bank group took second place in terms of performance with its strong capital structure. Private banks with foreign capital took third place after the 2001 crisis, especially with the improvement they achieved in Asset Quality. Participation banks, on the other hand, were adversely affected by the excess of fund transactions in their asset structures due to the fact that they were weaker than other bank groups in terms of capital structure and Sensitivity to Market Risk and due to the necessity to use interest-free instruments and they became the bank group that exhibited the worst performance. In the second stage, an analysis, the Stress Test Application, was made by applying a stress test to both the banking sector and Participation Banks, Foreign Capital Private, Domestic Private, and Public Capital 4 main groups, by making use of the 2020 year-end financial data announced by the BRSA. A stress test analysis was carried out to measure its resilience despite the possible shocks that the banking system may face in possible economic crises. As a result of the analysis, if a ranking is made starting from the most successful bank group, It will be seen that they are listed as Domestic Capital, Foreign Capital, Public Capital, and Participation Banks. In addition, it can be said that the Stress Test results are highly parallel to the results of the CAMELS analysis.