Analysis of Profitability Levels of Deposit Banks in Turkey

Abstract

This study aims to analyze the profitability levels of deposit banks in Turkey by using the panel data analysis method. Profitability is an important indicator reflecting the financial health of banks and is of great importance in terms of determining the sustainability and competitive advan- tages of banks in the sector. In this study, the factors affecting the profitability levels of deposit banks in Turkey are investigated. These factors include variables such as size, asset quality, capital adequacy, and liquidity status of banks. In the study, annual data for the period 2010–2020 were used through panel data analysis method, and CIPS (Cross Sectionally Augmented IPS) unit root test and Dumitrescu–Hurlin causality analysis were performed. According to the findings, there is a reciprocal causality relationship between bank earnings and return on average assets in deposit banks. In addition, it was determined that there is a unidirectional causality relationship between liquidity ratio and return on average assets. However, there is no causality relationship between capital adequacy and return on average assets. It was found that banks with increasing size gen- erally have higher profitability levels, whereas banks with low asset quality face difficulties in terms of profitability. These findings provide guidance on potential measures that banks can take to increase their profitability levels. The study aims to contribute to a better understanding of the performance of banks in the sector and to determine their future strategies.

Keywords

• deposit banks
• panel data analysis
• profitability level
• mevduat bankaları
• kârlılık düzeyi
• panel veri analizi