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Multi-Criteria Financial Performance Analysis of Turkish Participation Banks

Year 2020, , 861 - 873, 30.09.2020

İbrahim Yağlı

https://doi.org/10.29023/alanyaakademik.700013
Cited By: 7

Abstract

The current study aims to compare the performance of state participation banks with the performance of private participation banks. This comparison is quite significant since both state participation banks have a very short history and Turkey is a model for the world in interest-free banking. The integrated approach is adopted in the study. In the first stage, performance indicators are determined with the help of the CAMELS rating system. In the second stage, Turkish participation banks are ranked according to their relative performance by using the TOPSIS method. The results show that state participation banks outperform private participation banks. These results are valid even when different weights are used for CAMELS dimensions.

Keywords

CAMELS MCDM Islamic banking Participation banks Performance evaluation

References

  • AKKOC, S. and VATANSEVER, K. (2013). “Fuzzy Performance Evaluation with AHP and TOPSIS Methods: Evidence from Turkish Banking Sector after the Global Financial Crisis”, Eurasian Journal of Business and Economics, 6(11): 53-74.
  • ARAS, O. N. and OZTURK, M. (2011). “Analysis of Allocated Funds of Participation Banks In Terms Of Contribution to Real Economy”, Ekonomi Bilimleri Dergisi, 3(2): 167-169.
  • ARIFF, M. (1989). “Islamic Banking In Malaysia: Framework, Performance, and Lessons”, International Journal of Economics, Management and Accounting, 2(2): 67-78.
  • BATIR, T. E., VOLKMAN, D. A. and GUNGOR, B. (2017). “Determinants Of Bank Efficiency In Turkey: Participation Banks Versus Conventional Banks”, Borsa Istanbul Review, 17(2): 86-96.
  • DAR, H. A. and PRESLEY, J. R. (2000). “Lack Of Profit Loss Sharing In Islamic Banking: Management And Control Imbalances”, International Journal of Islamic Financial Services, 2(2): 3-18.
  • DASH, M. and DAS, A. (2013). “Performance Appraisal of Indian Banks Using CAMELS Rating”, IUP Journal of Bank Management, 12(2): 31-42.
  • DEMIRELI, E. (2010). “TOPSIS Multicriteria Decision Making Method: An Examination On State Owned Commercial Banks In Turkey”, Journal of Entrepreneurship and Development, 5(1): 101-112.
  • DINÇER, H. and YUKSEL, S. (2019). “An Integrated Stochastic Fuzzy MCDM Approach to the Balanced Scorecard-Based Service Evaluation”, Mathematics and Computers in Simulation, 166: 93-112.
  • DINCER, H., GENCER, G., ORHAN, N. and ŞAHINBAŞ, K. (2011). “A Performance Evaluation of the Turkish Banking Sector after the Global Crisis via CAMELS Ratios”, Procedia-Social and Behavioral Sciences, 24: 1530-1545.
  • DINCER, H., HACIOGLU, U. and YUKSEL S. (2016). “Performance Assessment of Deposit Banks with CAMELS Analysis Using FUZZY ANP-MOORA Approaches and An Application on Turkish Banking Sector”, Asian Journal of Research in Business Economics and Management, 6(2): 32-56.
  • DOGAN, M. (2013). “Measuring Bank Performance with Gray Relational Analysis: The Case of Turkey”, Ege Academic Review, 13(2): 215-226.
  • EGE, İ., TOPALOĞLU, E., and KARAKOZAK, Ö. 2015, ‘CAMELS Performans Değerleme Modeli: Türkiye’deki Mevduat Bankalari Üzerine Ampirik Bir Uygulama”, Niğde Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 8(4): 109-126.
  • EROL, C., F. BAKLACI, H., AYDOGAN, B. and TUNÇ, G. (2014). “Performance Comparison of Islamic (Participation) Banks and Commercial Banks in Turkish Banking Sector”, EuroMed Journal of Business, 9(2): 114-128.
  • GOKALP, F. (2015). “Comparing the Financial Performance of Banks in Turkey by Using PROMETHEE Method”, Ege Stratejik Araştırmalar Dergisi, 6(1): 63-82.
  • HWANG, C. L. and YOON, K. (1981). “Methods for Multiple Attribute Decision Making”, In Multiple Attribute Decision Making (58-191). Springer, Berlin, Heidelberg.
  • IKA, S. R. and ABDULLAH, N. (2011). “A Comparative Study of Financial Performance of Islamic Banks and Conventional Banks in Indonesia”, International Journal of Business and Social Science, 2(15): 199-207.
  • IQBAL, M. (2001). “Islamic and Conventional Banking in the Nineties: A Comparative Study”, Islamic Economic Studies, 8(2): 1-28.
  • ISMAIL, F., MAJID, M. S. A. and RAHIM, R. A. (2013). “Efficiency of Islamic and Conventional Banks in Malaysia”, Journal of Financial Reporting and Accounting, 11(1): 92-107.
  • KAKAKHEL, S. J., RAHEEM, F. and TARIQ, M. (2013). “A Study of Performance Comparison between Conventional and Islamic Banking in Pakistan”, Abasyn University Journal of Social Sciences, 6(2): 91-105.
  • KAMARUDDIN, B. H. AND MOHD, R. (2013). “CAMEL Analysis of Islamic Banking and Conventional Banking in Malaysia”, Business and Management Quarterly Review, 4(3): 81-89.
  • KAMARUDDIN, B. H., SAFAB, M. S. and MOHD, R. (2008). “Assessing Production Efficiency of Islamic Banks and Conventional Bank Islamic Windows in Malaysia”, International Journal of Business and Management Science, 1(1): 31-48.
  • KARAPINAR, A. and DOGAN, I. C. (2015). “An Analysis on the Performance of the Participation Banks in Turkey”, Accounting and Finance Research, 4(2): 24-33.
  • KARTAL, F. (2012). “Interest-free Banking in the World and a Financial Analysis of the Turkey Experience’, International Research Journal of Finance and Economics, 93: 183-201.
  • KAYA, T. and CINAR, Y. (2016). “Analyzing Internal Efficiency Dynamics of Turkish Banks: Activity Based Multi-Objective Dynamic DEA Model and Its Application”, Journal of Applied Business Research (JABR), 32(3): 729-746.
  • KOUSER, R. and SABA, I. (2012). “Gauging the Financial Performance of Banking Sector Using CAMEL Model: Comparison of Conventional, Mixed and Pure Islamic Banks in Pakistan”, International Research Journal of Finance and Economics, 82(1): 67-88.
  • ONDER, E., TAS, N. and HEPSEN, A. (2013). “Performance Evaluation of Turkish Banks Using Analytical Hierarchy Process and TOPSIS Methods”, Journal of International Scientific Publication: Economy and Business, 7(1): 470-503.
  • PEKKAYA, M. and DEMIR, F. E. (2018). “Determining the Priorities of CAMELS Dimensions Based on Bank Performance”, In Global Approaches in Financial Economics, Banking, and Finance (pp. 445-463). Springer, Cham.
  • PRESLEY, J. R. (2012). “Directory of Islamic Financial Institutions (RLE: Banking and Finance)”. Routledge.
  • ROSTAMI, M. (2015). “Determination of CAMELS Model on Bank’s Performance”, International Journal of Multidisciplinary Research and Development, 2(10): 652-664.
  • ROZZANI, N. and RAHMAN, R. A. (2013). “CAMELS and Performance Evaluation of Banks In Malaysia: Conventional versus Islamic”, Journal of Islamic Finance and Business Research, 2(1): 36-45.
  • SAMAD, A. (2004). “Performance of Interest-Free Islamic Banks Vis-À-Vis Interest-Based Conventional Banks of Bahrain”, International Journal of Economics, Management and Accounting, 12(2): 1-15.
  • SAMAD, A. and HASSAN, M. K. (2006). “The Performance of Malaysian Islamic Bank During 1984–1997: An Exploratory Study”, International Journal of Islamic Financial Services, 1(3).
  • SANGMI, M. and NAZIR, T. (2010). “Analyzing Financial Performance of Commercial Banks in India: Application of CAMEL Model”, Pakistan Journal of Commerce and Social Sciences (PJCSS), 4(1): 40-55.
  • SEÇME, N. Y., BAYRAKDAROĞLU, A. and KAHRAMAN, C. (2009). “Fuzzy Performance Evaluation in Turkish Banking Sector Using Analytic Hierarchy Process and TOPSIS”, Expert Systems with Applications, 36(9): 11699-11709.
  • STAUB, R. B., E SOUZA, G. D. S. and TABAK, B. M. (2010). “Evolution of Bank Efficiency in Brazil: A DEA Approach”, European Journal of Operational Research, 202(1): 204-213.
  • TKKB, Participation Banks Association of Turkey, “Participation Banks 2018 Sector Report” file:///C:/Users/Admin/Desktop/bank%20competition/Participation-Banks-2018-Sector-Report.pdf, 06.03.2020.
  • WANKE, P., KALAM AZAD, M. A., BARROS, C. P. and HADI‐VENCHEH, A. (2016). “Predicting Performance in ASEAN Banks: An Integrated Fuzzy MCDM–Neural Network Approach”, Expert Systems, 33(3): 213-229.
  • YAHYA, M. H., MUHAMMAD, J., and HADI, A. R. A. (2012). “A Comparative Study on the Level of Efficiency between Islamic and Conventional Banking Systems in Malaysia”, International Journal of Islamic and Middle Eastern Finance and Management, 5(1): 48-62.
  • YUDISTIRA, D. (2004). “Efficiency in Islamic Banking: An Empirical Analysis of Eighteen Banks”, Islamic Economic Studies, 12(1): 1-19.
  • YUKSEL, S., DINCER, H. and HACIOGLU, U. (2015). “CAMELS-Based Determinants for the Credit Rating of Turkish Deposit Banks”, International Journal of Finance and Banking Studies (2147-4486), 4(4): 1-17.
  • YUKSEL, S., MUKHTAROV, S. and MAMMADOV, E. (2016), “Comparing the Efficiency of Turkish and Azerbaijani Banks: An Application with Data Envelopment Analysis”, International Journal of Economics and Financial Issues, 6(3): 1059-1067.

Multi-Criteria Financial Performance Analysis of Turkish Participation Banks

Year 2020, , 861 - 873, 30.09.2020

İbrahim Yağlı

https://doi.org/10.29023/alanyaakademik.700013
Cited By: 7

Abstract

The current study aims to compare the performance of state participation banks with the performance of private participation banks. This comparison is quite significant since both state participation banks have a very short history and Turkey is a model for the world in interest-free banking. The integrated approach is adopted in the study. In the first stage, performance indicators are determined with the help of the CAMELS rating system. In the second stage, Turkish participation banks are ranked according to their relative performance by using the TOPSIS method. The results show that state participation banks outperform private participation banks. These results are valid even when different weights are used for CAMELS dimensions.

Keywords

Islamic banking Participation banks Performance Evaluation CAMELS MCDM

References

  • AKKOC, S. and VATANSEVER, K. (2013). “Fuzzy Performance Evaluation with AHP and TOPSIS Methods: Evidence from Turkish Banking Sector after the Global Financial Crisis”, Eurasian Journal of Business and Economics, 6(11): 53-74.
  • ARAS, O. N. and OZTURK, M. (2011). “Analysis of Allocated Funds of Participation Banks In Terms Of Contribution to Real Economy”, Ekonomi Bilimleri Dergisi, 3(2): 167-169.
  • ARIFF, M. (1989). “Islamic Banking In Malaysia: Framework, Performance, and Lessons”, International Journal of Economics, Management and Accounting, 2(2): 67-78.
  • BATIR, T. E., VOLKMAN, D. A. and GUNGOR, B. (2017). “Determinants Of Bank Efficiency In Turkey: Participation Banks Versus Conventional Banks”, Borsa Istanbul Review, 17(2): 86-96.
  • DAR, H. A. and PRESLEY, J. R. (2000). “Lack Of Profit Loss Sharing In Islamic Banking: Management And Control Imbalances”, International Journal of Islamic Financial Services, 2(2): 3-18.
  • DASH, M. and DAS, A. (2013). “Performance Appraisal of Indian Banks Using CAMELS Rating”, IUP Journal of Bank Management, 12(2): 31-42.
  • DEMIRELI, E. (2010). “TOPSIS Multicriteria Decision Making Method: An Examination On State Owned Commercial Banks In Turkey”, Journal of Entrepreneurship and Development, 5(1): 101-112.
  • DINÇER, H. and YUKSEL, S. (2019). “An Integrated Stochastic Fuzzy MCDM Approach to the Balanced Scorecard-Based Service Evaluation”, Mathematics and Computers in Simulation, 166: 93-112.
  • DINCER, H., GENCER, G., ORHAN, N. and ŞAHINBAŞ, K. (2011). “A Performance Evaluation of the Turkish Banking Sector after the Global Crisis via CAMELS Ratios”, Procedia-Social and Behavioral Sciences, 24: 1530-1545.
  • DINCER, H., HACIOGLU, U. and YUKSEL S. (2016). “Performance Assessment of Deposit Banks with CAMELS Analysis Using FUZZY ANP-MOORA Approaches and An Application on Turkish Banking Sector”, Asian Journal of Research in Business Economics and Management, 6(2): 32-56.
  • DOGAN, M. (2013). “Measuring Bank Performance with Gray Relational Analysis: The Case of Turkey”, Ege Academic Review, 13(2): 215-226.
  • EGE, İ., TOPALOĞLU, E., and KARAKOZAK, Ö. 2015, ‘CAMELS Performans Değerleme Modeli: Türkiye’deki Mevduat Bankalari Üzerine Ampirik Bir Uygulama”, Niğde Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 8(4): 109-126.
  • EROL, C., F. BAKLACI, H., AYDOGAN, B. and TUNÇ, G. (2014). “Performance Comparison of Islamic (Participation) Banks and Commercial Banks in Turkish Banking Sector”, EuroMed Journal of Business, 9(2): 114-128.
  • GOKALP, F. (2015). “Comparing the Financial Performance of Banks in Turkey by Using PROMETHEE Method”, Ege Stratejik Araştırmalar Dergisi, 6(1): 63-82.
  • HWANG, C. L. and YOON, K. (1981). “Methods for Multiple Attribute Decision Making”, In Multiple Attribute Decision Making (58-191). Springer, Berlin, Heidelberg.
  • IKA, S. R. and ABDULLAH, N. (2011). “A Comparative Study of Financial Performance of Islamic Banks and Conventional Banks in Indonesia”, International Journal of Business and Social Science, 2(15): 199-207.
  • IQBAL, M. (2001). “Islamic and Conventional Banking in the Nineties: A Comparative Study”, Islamic Economic Studies, 8(2): 1-28.
  • ISMAIL, F., MAJID, M. S. A. and RAHIM, R. A. (2013). “Efficiency of Islamic and Conventional Banks in Malaysia”, Journal of Financial Reporting and Accounting, 11(1): 92-107.
  • KAKAKHEL, S. J., RAHEEM, F. and TARIQ, M. (2013). “A Study of Performance Comparison between Conventional and Islamic Banking in Pakistan”, Abasyn University Journal of Social Sciences, 6(2): 91-105.
  • KAMARUDDIN, B. H. AND MOHD, R. (2013). “CAMEL Analysis of Islamic Banking and Conventional Banking in Malaysia”, Business and Management Quarterly Review, 4(3): 81-89.
  • KAMARUDDIN, B. H., SAFAB, M. S. and MOHD, R. (2008). “Assessing Production Efficiency of Islamic Banks and Conventional Bank Islamic Windows in Malaysia”, International Journal of Business and Management Science, 1(1): 31-48.
  • KARAPINAR, A. and DOGAN, I. C. (2015). “An Analysis on the Performance of the Participation Banks in Turkey”, Accounting and Finance Research, 4(2): 24-33.
  • KARTAL, F. (2012). “Interest-free Banking in the World and a Financial Analysis of the Turkey Experience’, International Research Journal of Finance and Economics, 93: 183-201.
  • KAYA, T. and CINAR, Y. (2016). “Analyzing Internal Efficiency Dynamics of Turkish Banks: Activity Based Multi-Objective Dynamic DEA Model and Its Application”, Journal of Applied Business Research (JABR), 32(3): 729-746.
  • KOUSER, R. and SABA, I. (2012). “Gauging the Financial Performance of Banking Sector Using CAMEL Model: Comparison of Conventional, Mixed and Pure Islamic Banks in Pakistan”, International Research Journal of Finance and Economics, 82(1): 67-88.
  • ONDER, E., TAS, N. and HEPSEN, A. (2013). “Performance Evaluation of Turkish Banks Using Analytical Hierarchy Process and TOPSIS Methods”, Journal of International Scientific Publication: Economy and Business, 7(1): 470-503.
  • PEKKAYA, M. and DEMIR, F. E. (2018). “Determining the Priorities of CAMELS Dimensions Based on Bank Performance”, In Global Approaches in Financial Economics, Banking, and Finance (pp. 445-463). Springer, Cham.
  • PRESLEY, J. R. (2012). “Directory of Islamic Financial Institutions (RLE: Banking and Finance)”. Routledge.
  • ROSTAMI, M. (2015). “Determination of CAMELS Model on Bank’s Performance”, International Journal of Multidisciplinary Research and Development, 2(10): 652-664.
  • ROZZANI, N. and RAHMAN, R. A. (2013). “CAMELS and Performance Evaluation of Banks In Malaysia: Conventional versus Islamic”, Journal of Islamic Finance and Business Research, 2(1): 36-45.
  • SAMAD, A. (2004). “Performance of Interest-Free Islamic Banks Vis-À-Vis Interest-Based Conventional Banks of Bahrain”, International Journal of Economics, Management and Accounting, 12(2): 1-15.
  • SAMAD, A. and HASSAN, M. K. (2006). “The Performance of Malaysian Islamic Bank During 1984–1997: An Exploratory Study”, International Journal of Islamic Financial Services, 1(3).
  • SANGMI, M. and NAZIR, T. (2010). “Analyzing Financial Performance of Commercial Banks in India: Application of CAMEL Model”, Pakistan Journal of Commerce and Social Sciences (PJCSS), 4(1): 40-55.
  • SEÇME, N. Y., BAYRAKDAROĞLU, A. and KAHRAMAN, C. (2009). “Fuzzy Performance Evaluation in Turkish Banking Sector Using Analytic Hierarchy Process and TOPSIS”, Expert Systems with Applications, 36(9): 11699-11709.
  • STAUB, R. B., E SOUZA, G. D. S. and TABAK, B. M. (2010). “Evolution of Bank Efficiency in Brazil: A DEA Approach”, European Journal of Operational Research, 202(1): 204-213.
  • TKKB, Participation Banks Association of Turkey, “Participation Banks 2018 Sector Report” file:///C:/Users/Admin/Desktop/bank%20competition/Participation-Banks-2018-Sector-Report.pdf, 06.03.2020.
  • WANKE, P., KALAM AZAD, M. A., BARROS, C. P. and HADI‐VENCHEH, A. (2016). “Predicting Performance in ASEAN Banks: An Integrated Fuzzy MCDM–Neural Network Approach”, Expert Systems, 33(3): 213-229.
  • YAHYA, M. H., MUHAMMAD, J., and HADI, A. R. A. (2012). “A Comparative Study on the Level of Efficiency between Islamic and Conventional Banking Systems in Malaysia”, International Journal of Islamic and Middle Eastern Finance and Management, 5(1): 48-62.
  • YUDISTIRA, D. (2004). “Efficiency in Islamic Banking: An Empirical Analysis of Eighteen Banks”, Islamic Economic Studies, 12(1): 1-19.
  • YUKSEL, S., DINCER, H. and HACIOGLU, U. (2015). “CAMELS-Based Determinants for the Credit Rating of Turkish Deposit Banks”, International Journal of Finance and Banking Studies (2147-4486), 4(4): 1-17.
  • YUKSEL, S., MUKHTAROV, S. and MAMMADOV, E. (2016), “Comparing the Efficiency of Turkish and Azerbaijani Banks: An Application with Data Envelopment Analysis”, International Journal of Economics and Financial Issues, 6(3): 1059-1067.
There are 41 citations in total.

Details

Primary Language English
Subjects Finance
Journal Section Makaleler
Authors

İbrahim Yağlı 0000-0001-8985-0172

Publication Date September 30, 2020
Acceptance Date September 2, 2020
Published in Issue Year 2020

Cite

APA Yağlı, İ. (2020). Multi-Criteria Financial Performance Analysis of Turkish Participation Banks. Alanya Akademik Bakış, 4(3), 861-873. https://doi.org/10.29023/alanyaakademik.700013

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