The Determinants of The Non-Performing Loans: The Case of Turkish Banking Sector

Özet

The objective of this study is to investigate the determinants of non-performing loans (NPLs) in the Turkish banking sector during the 2010-2019 period. The pooled OLS (POLS), the fixed effects (FE) and the system GMM (SGMM) were used for the analyses. Empirical results show that capital adequacy ratio and GDP growth rate have a statistically significant negative effect on the NPLs ratio. The operating efficiency, the income diversification, the first lagged NPLs ratio and the inflation are positively associated with the NPLs ratio. The negative relation between the capital adequacy ratio and the nonperforming loans ratio supports the moral hazard hypot hesis. The positive relation between the other operating expenses to total assets ratio and nonperforming loans ratio supports the bad management hypothesis.

Abstract

The objective of this study is to investigate the determinants of non-performing loans (NPLs) in the Turkish banking sector during the 2010-2019 period. The pooled OLS (POLS), the fixed effects (FE) and the system GMM (SGMM) were used for the analyses. Empirical results show that capital adequacy ratio and GDP growth rate have a statistically significant negative effect on the NPLs ratio. The operating efficiency, the income diversification, the first lagged NPLs ratio and the inflation are positively associated with the NPLs ratio. The negative relation between the capital adequacy ratio and the nonperforming loans ratio supports the moral hazard hypot hesis. The positive relation between the other operating expenses to total assets ratio and nonperforming loans ratio supports the bad management hypothesis.

Yazarlar

Ersan ERSOY

Anahtar Kelimeler

Non-Performing Loans, Credit Risk, Turkish Banking Sector, Moral Hazard Hypothesis, Bad Management Hypothesis.

JEL Codes

C23, E44, G21

Yayın Bilgileri

Cilt 1, Sayı 2, 2021 · Sayfa 1-11

DOI: 10.52898/ijif.2021.6

Dosyalar