Journal of Applied Finance & Banking

Analysis of the Factors that Determine the Profitability of the Deposit Banks in Turkey

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  • Abstract

    This study investigated the effects of internal factors under the control of deposit banks in Turkey and external factors that reflect the financial system in countries and that are beyond the control of the banks on the profitability of the banks. For this purpose, a multilinear regression analysis was carried out using the data of Turkish deposit banks of the period between 2008 and 2014. As a result, it was determined that there is a high correlation between the asset profitability and equity profitability of the banks, and micro variables are more effective in the determination of a bank’s performance when compared to macroeconomic variables. It was further detected that liquidity, which is determined as a macro variable, has a negative effect on equity profitability, and the expense management of the bank is the only variable affecting a bank’s profitability and equity profitability. Findings obtained as a result of the analysis carried out will help banks develop policies on the internal and external factors determining the profitability performances in order to be able to increase their efficiency in the financial system.