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Journals / Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi / 2018 / Cilt: 40 - Sayı: 1

CROSS-BORDER LOAN LIABILITY, THE EXCHANGE RATE AND PROFITABILITY IN THE TURKISH BANKING SECTOR

Gökhan ÖVENÇ
Resul AYDEMİR
Pages
51–68
Publication Date
2018-06-27
DOI
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

Overall, we findthat the banking sector financial inflows are positively associated with bank profitability.

📌 3 Key Takeaways

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Objective & Hypothesis:We examine how the cross border banking loan liabilities (syndication and securitization loans) andthe exchange rate affect the Turkish banking industry profitability using a balanced panel data for theperiod 2003Q1-2016Q3.
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Key Findings & Data:Specifically, theresults show that the banking sector cross border inflows have significant and positive impact on returnon assets (ROA), return on equity (ROE) and on net interest margin (NIM).
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Conclusion & Impact:Overall, we findthat the banking sector financial inflows are positively associated with bank profitability.
🔬Design:Modeling & Simulation
📍Scope:Comprehensive Sample
⚙️Variables:Cross Border Banking Liability · Long-term Liability · Short-term Liability

Özet

We examine how the cross border banking loan liabilities (syndication and securitization loans) andthe exchange rate affect the Turkish banking industry profitability using a balanced panel data for theperiod 2003Q1-2016Q3. We study with different subsamples and model specifications. Overall, we findthat the banking sector financial inflows are positively associated with bank profitability. Specifically, theresults show that the banking sector cross border inflows have significant and positive impact on returnon assets (ROA), return on equity (ROE) and on net interest margin (NIM). The long-term inflowsplay a more important role than the short-term inflows in explaining profitability in all specificationswhile short-term inflows have no any significant effect on these profitability indicators. Moreover, weshow that the exchange rate has significant and negative impact on ROA and ROE and has insignificanteffect on NIM. Our findings are more notable in private banks compared to the whole sample. Giventhe fact that the existing studies examine the banking profitability through aggregate capital inflowsand maturity mismatch, this study will fill a meaningful gap in emerging market literature.

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Cite This Article

ÖVENÇ, G., AYDEMİR, R. (2018). CROSS-BORDER LOAN LIABILITY, THE EXCHANGE RATE AND PROFITABILITY IN THE TURKISH BANKING SECTOR. Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi, Cilt: 40 - Sayı: 1, 51–68. https://ajindex.com/articles/6364

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