Determining the relationship between non-performing loans, economic growth, and asset size: An application in Turkish Participation Banking Sector (original) (raw)
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International Journal of Academic Research in Economics and Management Sciences, 2022
Although loans are a profitable product for banks, they inherently contain an element of risk. The financial sector in terms of the fact that a loan transferred to the economy is not paid in due time and becomes problematic, firstly affecting the bank that made the loan and then other banks. On the other hand, it affects the real sector in terms of reducing the amount of loan to be transferred to the economy and increasing the cost of loan. In other words, the existence and control of non-performing loans is very important for the activities of both the banking sector and the real sector. In this study, the relations between the amount of nonperforming loans, real effective exchange rate, inflation rate, economic growth and interest rates were analyzed by ARDL analysis method. It covers the periods from 2003; Q1 to 2020; Q4. As a result, it has been determined that other variables other than the inflation rate affect non-performing loans.
THE EFFECT OF MACROECONOMIC VARIABLES ON NON-PERFORMING LOANS IN TURKISH BANKING SECTOR
Non-performing loans are one of the most important data which is used to determine efficiency of the banks as well as the health of the banking sector and the financial crisis effects. In this study, the relationship between the non-performing loans in Turkish banking sector and the macro economic variables which point out the general economic condition as stock exchange index over biggest 100 companies (BIST100), currency values as EUR and USD and the industry production index (SUE) over the years between 2005 and 2015 is analysed. It was seen that there is causal relationships between those variables with non-performing loans which is measured as non-performing loans / total loans.
An Evaluation Of The Volume Of Loans In The Banking System And Economic Growth In Turkey
Turkish Economy in a New Era: Selected Articles, 2016
Banks have an important place in the financial system. It is important that banks are fulfilling their functions completely for the overall economy of a country to grow. Therefore, it is necessary for realizing the economic growth that the banking system to perform deposit credit flow substantially. The fundamental difference between developed countries and developing countries is the contribution of banking system to the economy of the country. While developed countries have a strong financial system and producing plus value proportional to their economy, fragility of financial system in developing countries cause its contribution to the economy be minimal. Herewith, it is thought that there is a relationship between credit expansion and economic growth. The main aim of this study is to analyze the loans given by the banking system and economic growth in Turkey. In the direction of this main aim, the relationship between total loans and receivables and economic growth is analyzed by Toda-Yamamoto Causality analysis.
The Determinants of The Non-Performing Loans: The Case of Turkish Banking Sector
Sivas Soft Bilisim Proje Danismanlik Egitim Sanayi ve Ticaret Limited Sirketi, 2021
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 hypothesis. The positive relation between the other operating expenses to total assets ratio and nonperforming loans ratio supports the bad management hypothesis.
Ege Akademik Bakis (Ege Academic Review), 2015
This paper investigates the linkages among the nonperforming loans and different macroeconomic and bank-specific factors in the Turkish banking sector over the period 2007-2013. The study is motivated by the hypothesis that both different macroeconomic and bank-specific variables have an effect on the quality of the loans. The long run relationship among the non-performing loans and these variables is analyzed by using Johansen-Juselius (1990) cointegration tests; short-run dynamics is tested through Granger Causality test, and the direction of the causality, through the Vector Error Correction Model (VECM). The results show that there exists consistent and strong long-run relationship among the nonperforming loans, macroeconomic variables and bank-specific factors. However, the short-term causal relationships are considerably limited, and, where they exist, especially unidirectional.
THE EFFECT OF MACROECONOMIC VARIABLES ON NON-PERFORMING LOANS IN TURKISH
Non-performing loans are one of the most important data which is used to determine efficiency of the banks as well as the health of the banking sector and the financial crisis effects. In this study, the relationship between the non-performing loans in Turkish banking sector and the macro economic variables which point out the general economic condition as stock exchange index over biggest 100 companies (BIST100), currency values as EUR and USD and the industry production index (SUE) over the years between 2005 and 2015 is analysed. It was seen that there is causal relationships between those variables with non-performing loans which is measured as non-performing loans / total loans. Keywords: Non-performing Loans, BIST100, SUE, VAR.
Determinants of non-performing loans of deposit banks in Turkey
Journal of Business, Economics and Finance, 2016
This study empirically analyzes the factors that determine the non-performing loans (so-called bad loans) of 20 deposit banks in Turkey for 2006-2012 period using panel data analysis method. The analysis results reveal that solvency, profitability, credit quality, diversification, economic growth and the recent financial crisis are essential indicators of non-performing loans rate in Turkish banking sector. More specifically, greater profitability and revenue diversification significantly lowers non-performing loans rate, whereas greater capital and loan loss provisions significantly increase non-performing loans rate. In terms of macroeconomic variables, only economic growth has a negative effect on the non-performing loans (NPLs) ratio. Moreover, our results also uncover that deposit banks' NPLs ratio increases during the latest global financial turmoil period.
The Effect of Macroeconomic Factors on Non-Performing Loans: A Time Series Analysis for Turkey
İktisadi İdari ve Siyasal Araştırmalar Dergisi, 2021
With the 2008 Global Crisis, Non-performing loans (NPLs) has dramatically increased in both developed and developing countries. The excessive and uncontrolled increase in NPLs caused serious deterioration in the banking system. Particularly, in the countries, such as Turkey, where the banking system has a quite significant place in financial system, the deterioration in the banking system affects not only financial markets but also the economy in a negative way. In this research paper, the association between exchange rate, interest rate, total loan volume and production (output), which are macroeconomic variables expressed as external factors in the literature, and NPLs is investigated for 2008:01-2017:12 period in Turkey. Unrestricted error correction model (UECM) and boundary test approach with the scope of ARDL analysis developed by Pesaran et al. (2001) is applied as an analysis method. Based on the analysis results, it is found that these macroeconomic variables and NPLs are cointegrated. Moreover, there is an economical and statistically significant relationship between interest rate and total loan volume and NPLs in both long and short term. In other words, it is determined that if interest rate and total loan volume increases, NPLs also move in the same direction.
Macroeconomic Determinants of Non-performing Loans: From Turkish Banking Sector
2018
The issue of non-performing loans is one of the factors that reflect the soundness of the banking sector. The main objective of this study is to identify macroeconomic determinants of non-performing loans in some Arab countries through the period 2000-2012 using the dynamic panel data approach. The outcomes of this paper suggest that inflation rate has a negative impact on NPLs, whereas improvement in macroeconomic and financial conditions seems to have a negative impact on the level of NPLs. Regarding the impact of the global financial crisis, the results show that the crisis had a negative impact on the level of NPLs. With regard to household consumption, the outcomes point out to mixed results where this effect seems to be negative in non-petroleum countries but positive in petroleum countries, whereas increasing of government spending is associated with low level of NPLs in both groups of countries. Moreover, an increase of the aggregate debt burden has a positive impact on the level of bad loans whereas expansionary monitory policy and improvement of terms of trade in petroleum countries have a significant negative effect on NPLs but this effect is not clear in non-petroleum countries.