Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Turkey

Business and Economics Research Journal, Vol. 2, No. 2, pp. 139-152, 2011

14 Pages Posted: 9 May 2011

See all articles by Adem Anbar

Adem Anbar

Uludag University

Deger Alper

Uludag University

Date Written: April 20, 2011

Abstract

The aim of this study is to examine the bank-specific and macroeconomic determinants of the banks profitability in Turkey over the time period from 2002 to 2010. The bank profitability is measured by return on assets (ROA) and return on equity (ROE) as a function of bank-specific and macroeconomic determinants. Using a balanced panel data set, the results show that asset size and non-interest income have a positive and significant effect on bank profitability. However, size of credit portfolio and loans under follow-up have a negative and significant impact on bank profitability. With regard to macroeconomic variables, only the real interest rate affects the performance of banks positively. These results suggest that banks can improve their profitability through increasing bank size and non-interest income, decreasing credit/asset ratio. In addition, higher real interest rate can lead to higher bank profitability.

Keywords: Bank Profitability, Commercial Banks, Turkish Banking Sector

JEL Classification: G21, M20

Suggested Citation

Anbar, Adem and Alper, Deger, Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Turkey (April 20, 2011). Business and Economics Research Journal, Vol. 2, No. 2, pp. 139-152, 2011. Available at SSRN: https://ssrn.com/abstract=1831345

Adem Anbar (Contact Author)

Uludag University ( email )

16059 Campus Gorukle Nilüfer
Bursa
Turkey

Deger Alper

Uludag University ( email )

16059 Campus Gorukle Nilüfer
Bursa
Turkey

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