Assessing the Factors that Impact Non-Performing Loan Ratio: An Application On Deposit Banks By Using Dynamic Panel Data
Journal of Business Research-Turk, 2016
Posted: 8 Jun 2019
Date Written: 2016
Abstract
This study aims to determine the factors that are effective on non-performing loans ratio after the 2001 local financial crisis. State-owned banks, privately-owned banks and foreign banks that operate in Turkey between the years 2002 and 2014 are examined. According to System-GMM and Difference GMM results, lagged value of non-performing loans, net interest margin, capital adequacy and solvency ratio have negative effects on non-performing loans ratio. On the other hand, interest applied to loans, loans/ deposits ratio, inefficiency and operating efficiency have positive effects on non performing loans. Although the results are consistent with moral hazard and bad managemet hypothesis, they are inconsistent with diversification hypothesis.
Keywords: Non-performing Loans, Turkish Banking Sector, Dynamic Panel Data
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