Research Article

NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION

Volume: 27 Number: 1 July 2, 2026
EN TR

NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION

Abstract

This study analyses net interest margin dynamics in the Turkish banking sector under high inflation and elevated interest rates. Contrary to conventional expectations that rising rates widen margins, empirical evidence shows that net interest margin has contracted. Policy rate increases exert a negative long run effect, while higher non performing loans further compress profitability. A positive relationship has been found between capital adequacy and net interest margin. Short deposit maturities cause funding costs to adjust faster than lending rates, exposing banks to interest rate risk. Macroprudential measures—such as reserve requirements, security holding obligations, and credit growth restrictions—reduce asset liability flexibility, amplifying downward pressure on margins. High volatility in inflation and policy rates is complicating margin management. As a result, real returns on equity erode despite nominal profits, creating hidden profitability risks. The findings highlight the need for durable price stability and balanced regulatory design to sustain banking resilience and long term profitability.

Keywords

References

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Details

Primary Language

English

Subjects

Finance

Journal Section

Research Article

Publication Date

July 2, 2026

Submission Date

January 18, 2026

Acceptance Date

April 21, 2026

Published in Issue

Year 2026 Volume: 27 Number: 1

APA
Şahin, S. (2026). NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION. Doğuş Üniversitesi Dergisi, 27(1), 1264-1288. https://doi.org/10.31671/doujournal.1866345
AMA
1.Şahin S. NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION. Doğuş Üniversitesi Dergisi. 2026;27(1):1264-1288. doi:10.31671/doujournal.1866345
Chicago
Şahin, Sinan. 2026. “NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION”. Doğuş Üniversitesi Dergisi 27 (1): 1264-88. https://doi.org/10.31671/doujournal.1866345.
EndNote
Şahin S (July 1, 2026) NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION. Doğuş Üniversitesi Dergisi 27 1 1264–1288.
IEEE
[1]S. Şahin, “NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION”, Doğuş Üniversitesi Dergisi, vol. 27, no. 1, pp. 1264–1288, July 2026, doi: 10.31671/doujournal.1866345.
ISNAD
Şahin, Sinan. “NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION”. Doğuş Üniversitesi Dergisi 27/1 (July 1, 2026): 1264-1288. https://doi.org/10.31671/doujournal.1866345.
JAMA
1.Şahin S. NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION. Doğuş Üniversitesi Dergisi. 2026;27:1264–1288.
MLA
Şahin, Sinan. “NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION”. Doğuş Üniversitesi Dergisi, vol. 27, no. 1, July 2026, pp. 1264-88, doi:10.31671/doujournal.1866345.
Vancouver
1.Sinan Şahin. NET INTEREST MARGIN DYNAMICS IN THE TURKISH BANKING SECTOR UNDER HIGH INFLATION. Doğuş Üniversitesi Dergisi. 2026 Jul. 1;27(1):1264-88. doi:10.31671/doujournal.1866345