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Determining the Factors Affecting Capital Adequacy with the Help of Panel Regression: Deposit Banks Example

Year 2021, Volume: 5 Issue: 9, 289 - 303, 30.12.2021

Abstract

The main service and field of activity of the banking sector is the intermediary function of resources. With financial globalization, the financial system and financial products have diversified, and with the globalization of technology, structural changes have emerged in the banking sector. The diversification of financial products has led to a differentiation in their risks.In the risk and profitability management of banks, it is of great importance that their capital structures are at a level to meet the risks. The strength and adequacy of the banks' capital structures are the most important conditions for the safe functioning of the banking system. The more effectively and efficiently the capital adequacy ratio is used, the more efficient the banks become. The aim of this study is to determine the factors affecting capital adequacy with the help of panel regression analysis for the Turkish banking sector public and private capital deposit banks for the annual data for the period of 2010-2020. As a result of panel regression analysis; return on assets, liquidity adequacy ratio, deposit level and legal equity / risk weighted items total ratios positively affect the capital adequacy ratio, while the non-performing loans (gross) / total cash loans ratio negatively affect statistically. The most effective variables positively on capital adequacy were obtained as return on assets and liquidity adequacy ratio.

References

  • Abba, Gabriel O., Okwa, Ene, Soje, Benedict, and Aikpitanyi, Lilian N. (2018). “Determinants of Capital Adequacy Ratio of Deposit Money Banks in Nigeria.” Journal of Accounting & Marketing 7(2),1-7.
  • Adalessossi, K. (2017). Bankaların Karlılık Ve Sermaye Yeterliliğini Etkileyen Faktörlerin Analizi: Batı Afrika Ekonomik Ve Parasal Birliği Bankacılık Sektörü Uygulaması, Yayınlanmamış Doktora Tezi, Akdeniz Üniversitesi Sosyal Bilimler Enstitüsü, Antalya.
  • Aktas, Rafet, Bakin, Bilge, and Celik, Gökhan. (2015). “The Determinants of Banks’ Capital Adequacy Ratio: Some Evidence from South Eastern European Countries.” Journal of Economics and Behavioral Studies, 7(1),79-88.
  • Aspal, P. K., & Nazneen, A. (2014). An empirical analysis of capital adequacy in the Indian private sector banks. American Journal of Research Communication, 2(11), 28-42.
  • Baltagi, B.H. (2005). Econometric Analysis of Panel Data. New York: John Wiley and Sons Pbc. Bateni, L., Vakilifard, H. and Asghari, F. (2014). The influential factors on capital adequacy ratio in Iranian banks. International Journal of Economics and Finance 6(11), 108-116. Büyükşalvarcı, A., & Abdioğlu, H. (2011). Determinants of capital adequacy ratio in Turkish Banks: A panel data analysis. African Journal of Business Management, 5(27), 11199-11209.
  • Casu, B., Molyneux, P. & Girardone, C. (2015). Introduction to Banking. 2nd ed. London: Prentice Hall Financial Times. Choi, I. (2001). Unit root tests for panel data. Journal of International Money and Finance, 20(2): 249-272.
  • Dreca, N. (2014). Determinants of Capital Adequacy Ratio in Selected Bosnian Banks. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, 12(1),149-162. Erdoğan, A, (2014). Basel Kriterlerinin Bankacılık Sektörüne Etkisi Ve Türkiye’de Bankacılık Sektörünün Basel Kriterlerine Uyum Süreci, Trakya Üniversitesi Sosyal Bilimler Dergisi. 16(16), 160-162. Gropper, D. M. ve Oswald, S. L. (1996). Regulation, Deregulation and managerial behaviour: New evidence On Expense preference İn Banking. Applied Financial Economics, 6(1), 1-7.
  • Ho, S. J., and Hsu, S-C. (2010). Leverage, Performance and Capital Adequacy Ratio in Taiwan's Banking Industry. Japan and the World Economy 22(4),264-272. Hull, J. C. (2012). Risk Management and Financial Institutions, Third edition, New York: John Wiley & Sons. Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53-74.
  • Işık, Ö. ve İ. N. Yalman. 2017.“Türkiye'de Bankaların Sermaye Yapısının Belirleyicilerinin Ampirik Analizi”, 2nd International Scientific Researches Congress On Humanities and Social Sciences, İstanbul, Turkey.
  • Irawan, K., & Anggono, H. A. (2015). A study of capital adequacy ratio and its determinants in Indonesian banks: A panel data analysis. International Journal of Management and Applied Science, 1(9), 1-4.
  • Kaya M. Ve Torun R. (2018). Basel III Uzlaşısının Getirdikleri Ve Sürecin Türk Bankacılık Sektörüne Etkileri. Marmara Üniversitesi Sosyal Bilimler Dergisi, 7(13), ss. 45-65.
  • Kleff, V. & Weber, M. (2008). How Do Banks Determine Capital? Empirical Evidence from Research. Germain Economic Review, 9(3), 354-372.
  • Le, T.T. & Nguyen, D. L. (2017). Determinants of Banks’ Capital Adequacy ratio: Case Study from Vietnam. International Conference “Financing for Innovation, Entrepreneurship & Renewable Energy Development”, Hanoi, pp. 413-436.
  • Maddala, G. S. & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, Special Issue, 61(S1), 631-652.
  • Masood, U. & Ansari, S. (2016.) Determinants of Capital Adequacy Ratio "A perspective from Pakistani banking sector". International Journal of Economics, Commerce & Management. 4(17), 247-273.
  • Mekonnen, Y. (2015). Determinants of Capital Adequacy of Ethiopia Commercial Banks. European Scientific Journal 11(25), 315-331. Myers, S. C. ve N. S. Majluf. 1984. “Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have”, Journal of Financial Economics, 13(2).
  • Nyong, O. M. (2001). “Monetary Policy and Commercial Banks' in Nigeria: Some Theoretical and Empirical Extensions”, CBN Econ. Financ. Rev. 34(3),777-795. Octavia, M. & Brown, R. (2010). Determinants of bank capital structure in developing countries: Regulatory capital requirement versus the standard determinants of capital structure, Journal of Emerging Market, 15, 50-62.
  • Ochei, I. (2013). Capital adequacy, management and performance in the Nigerian commercial bank. African Journal of Business Management, 7(30), 2938-2950.
  • Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. CESifo Working Papers, No. 1229, 1-40.
  • Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265-312.
  • Pesaran, M. H. & Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of Econometrics, 142 (1), 50-93.
  • Pesaran, M. H., Ullah A., & Yamagata T. (2008). A bias-adjusted LM test of error cross-section independence. Econometrics Journal, 11 (1), 105-127.
  • Reis, G., & Kötüoğlu, R. (2016). Türk bankacılık sektörünün sermaye yeterliliği davranışı. Yönetim ve Ekonomi Araştırmaları Dergisi, 14(3), 101-110. Rees, R. (1974). A Reconsideration of the expense preference theory Of The firm, Econometrica, 41(1), 295-307.
  • Romdhane, M. (2012). The Determinants of Banks’ Capital Ratio in Developing Countries: Empirical Evidence from Tunisia. Research Journal of Finance and Accounting, 3(1), 35-46.
  • Shahchera, M. 2013. The Determinants of Banks’ Capital Structure: The Case of Iran, Journal of Money and Economy, 8(1), 141-167.
  • Vu, H & Dang, N. (2020). Determinants influencing capital adequacy ratio of Vietnamese commercial banks. Accounting, 6(5), 871-878.
  • Williamson, O. E. (1963). Managerial Discretion and Business Behavior. American Economic Review, December, 53(1), 1032 -1057.
  • Wong, J., K. Choi and T. Fong., 2005. Determinants of the capital level of banks in Hong Kong. Hong Kong Monetary Authority Quarterly Bulletin, 1(1), 14-37.

Sermaye Yeterliliğini Etkileyen Faktörlerin Panel Regresyon Yardımıyla Belirlenmesi: Mevduat Bankaları Örneği

Year 2021, Volume: 5 Issue: 9, 289 - 303, 30.12.2021

Abstract

Bankacılık sektörünün temel hizmet ve faaliyet konusu kaynaklara aracılık yapma fonksiyonudur. Finansal küreselleşmeyle birlikte finansal system ve finansal ürünler çeşitlenmiş ve teknolojinin küreselleşmesiyle de birlikte bankacılık sektöründe yapısal değişiklikler ortaya çıkmıştır. Finansal ürünlerin çeşitlenmesi risklerinde farklılaşmasına neden olmuştur. Bankaların risk ve karlılık yönetiminde, sermaye yapılarının riskleri karşılayacak düzeyde olması büyük önem taşımaktadır. Bankaların sermaye yapılarının gücü ve yeterliliği bankacılık sisteminin güvenli bir şekilde işlemesinin en önemli koşıludur. Sermaye yeterliliği oranı ne kadaer etkili ve verimli bir şekilde kullanılırsa o derecede bankaların etkinliği de artmaktadır. Bu çalışmanın amacı, 2010-2020 dönemi yıllık veriler için, Türk bankacılık sektörü kamu ve özel sermayeli mevduat bankalarına yönelik, panel regersyon analizi yardımıyla sermaye yeterliliğini etkileyen faktörlerin belirlenmesidir. Panel regresyon analizi sonucunda; aktif karlılığı, likidite yeterlilik oranı, mevduat düzeyi ve yasal özkaynak / risk ağırlıklı kalemler toplamı oranlarının sermaye yeterliliği rasyosunu pozitif yönde, takipteki alacaklar (brüt) / toplam nakdi krediler oranının negatif yönde istatistik anlamlı etkilediği belirlenmiştir. Sermaye yeterliliği üzerinde olumlu yönde en etkili değişkenler aktif karlılığı ve likidite yeterlilik oranı olarak elde edilmiştir.

References

  • Abba, Gabriel O., Okwa, Ene, Soje, Benedict, and Aikpitanyi, Lilian N. (2018). “Determinants of Capital Adequacy Ratio of Deposit Money Banks in Nigeria.” Journal of Accounting & Marketing 7(2),1-7.
  • Adalessossi, K. (2017). Bankaların Karlılık Ve Sermaye Yeterliliğini Etkileyen Faktörlerin Analizi: Batı Afrika Ekonomik Ve Parasal Birliği Bankacılık Sektörü Uygulaması, Yayınlanmamış Doktora Tezi, Akdeniz Üniversitesi Sosyal Bilimler Enstitüsü, Antalya.
  • Aktas, Rafet, Bakin, Bilge, and Celik, Gökhan. (2015). “The Determinants of Banks’ Capital Adequacy Ratio: Some Evidence from South Eastern European Countries.” Journal of Economics and Behavioral Studies, 7(1),79-88.
  • Aspal, P. K., & Nazneen, A. (2014). An empirical analysis of capital adequacy in the Indian private sector banks. American Journal of Research Communication, 2(11), 28-42.
  • Baltagi, B.H. (2005). Econometric Analysis of Panel Data. New York: John Wiley and Sons Pbc. Bateni, L., Vakilifard, H. and Asghari, F. (2014). The influential factors on capital adequacy ratio in Iranian banks. International Journal of Economics and Finance 6(11), 108-116. Büyükşalvarcı, A., & Abdioğlu, H. (2011). Determinants of capital adequacy ratio in Turkish Banks: A panel data analysis. African Journal of Business Management, 5(27), 11199-11209.
  • Casu, B., Molyneux, P. & Girardone, C. (2015). Introduction to Banking. 2nd ed. London: Prentice Hall Financial Times. Choi, I. (2001). Unit root tests for panel data. Journal of International Money and Finance, 20(2): 249-272.
  • Dreca, N. (2014). Determinants of Capital Adequacy Ratio in Selected Bosnian Banks. Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, 12(1),149-162. Erdoğan, A, (2014). Basel Kriterlerinin Bankacılık Sektörüne Etkisi Ve Türkiye’de Bankacılık Sektörünün Basel Kriterlerine Uyum Süreci, Trakya Üniversitesi Sosyal Bilimler Dergisi. 16(16), 160-162. Gropper, D. M. ve Oswald, S. L. (1996). Regulation, Deregulation and managerial behaviour: New evidence On Expense preference İn Banking. Applied Financial Economics, 6(1), 1-7.
  • Ho, S. J., and Hsu, S-C. (2010). Leverage, Performance and Capital Adequacy Ratio in Taiwan's Banking Industry. Japan and the World Economy 22(4),264-272. Hull, J. C. (2012). Risk Management and Financial Institutions, Third edition, New York: John Wiley & Sons. Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panels. Journal of Econometrics, 115(1), 53-74.
  • Işık, Ö. ve İ. N. Yalman. 2017.“Türkiye'de Bankaların Sermaye Yapısının Belirleyicilerinin Ampirik Analizi”, 2nd International Scientific Researches Congress On Humanities and Social Sciences, İstanbul, Turkey.
  • Irawan, K., & Anggono, H. A. (2015). A study of capital adequacy ratio and its determinants in Indonesian banks: A panel data analysis. International Journal of Management and Applied Science, 1(9), 1-4.
  • Kaya M. Ve Torun R. (2018). Basel III Uzlaşısının Getirdikleri Ve Sürecin Türk Bankacılık Sektörüne Etkileri. Marmara Üniversitesi Sosyal Bilimler Dergisi, 7(13), ss. 45-65.
  • Kleff, V. & Weber, M. (2008). How Do Banks Determine Capital? Empirical Evidence from Research. Germain Economic Review, 9(3), 354-372.
  • Le, T.T. & Nguyen, D. L. (2017). Determinants of Banks’ Capital Adequacy ratio: Case Study from Vietnam. International Conference “Financing for Innovation, Entrepreneurship & Renewable Energy Development”, Hanoi, pp. 413-436.
  • Maddala, G. S. & Wu, S. (1999). A comparative study of unit root tests with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, Special Issue, 61(S1), 631-652.
  • Masood, U. & Ansari, S. (2016.) Determinants of Capital Adequacy Ratio "A perspective from Pakistani banking sector". International Journal of Economics, Commerce & Management. 4(17), 247-273.
  • Mekonnen, Y. (2015). Determinants of Capital Adequacy of Ethiopia Commercial Banks. European Scientific Journal 11(25), 315-331. Myers, S. C. ve N. S. Majluf. 1984. “Corporate Financing and Investment Decisions When Firms Have Information That Investors Do Not Have”, Journal of Financial Economics, 13(2).
  • Nyong, O. M. (2001). “Monetary Policy and Commercial Banks' in Nigeria: Some Theoretical and Empirical Extensions”, CBN Econ. Financ. Rev. 34(3),777-795. Octavia, M. & Brown, R. (2010). Determinants of bank capital structure in developing countries: Regulatory capital requirement versus the standard determinants of capital structure, Journal of Emerging Market, 15, 50-62.
  • Ochei, I. (2013). Capital adequacy, management and performance in the Nigerian commercial bank. African Journal of Business Management, 7(30), 2938-2950.
  • Pesaran, M. H. (2004). General diagnostic tests for cross section dependence in panels. CESifo Working Papers, No. 1229, 1-40.
  • Pesaran, M. H. (2007). A simple panel unit root test in the presence of cross-section dependence. Journal of Applied Econometrics, 22(2), 265-312.
  • Pesaran, M. H. & Yamagata, T. (2008). Testing slope homogeneity in large panels. Journal of Econometrics, 142 (1), 50-93.
  • Pesaran, M. H., Ullah A., & Yamagata T. (2008). A bias-adjusted LM test of error cross-section independence. Econometrics Journal, 11 (1), 105-127.
  • Reis, G., & Kötüoğlu, R. (2016). Türk bankacılık sektörünün sermaye yeterliliği davranışı. Yönetim ve Ekonomi Araştırmaları Dergisi, 14(3), 101-110. Rees, R. (1974). A Reconsideration of the expense preference theory Of The firm, Econometrica, 41(1), 295-307.
  • Romdhane, M. (2012). The Determinants of Banks’ Capital Ratio in Developing Countries: Empirical Evidence from Tunisia. Research Journal of Finance and Accounting, 3(1), 35-46.
  • Shahchera, M. 2013. The Determinants of Banks’ Capital Structure: The Case of Iran, Journal of Money and Economy, 8(1), 141-167.
  • Vu, H & Dang, N. (2020). Determinants influencing capital adequacy ratio of Vietnamese commercial banks. Accounting, 6(5), 871-878.
  • Williamson, O. E. (1963). Managerial Discretion and Business Behavior. American Economic Review, December, 53(1), 1032 -1057.
  • Wong, J., K. Choi and T. Fong., 2005. Determinants of the capital level of banks in Hong Kong. Hong Kong Monetary Authority Quarterly Bulletin, 1(1), 14-37.
There are 28 citations in total.

Details

Primary Language Turkish
Subjects Business Administration
Journal Section Articles
Authors

Ayşegül Ertuğrul Ayrancı 0000-0002-6564-6326

Publication Date December 30, 2021
Submission Date November 27, 2021
Acceptance Date December 4, 2021
Published in Issue Year 2021 Volume: 5 Issue: 9

Cite

APA Ertuğrul Ayrancı, A. (2021). Sermaye Yeterliliğini Etkileyen Faktörlerin Panel Regresyon Yardımıyla Belirlenmesi: Mevduat Bankaları Örneği. International Journal of Entrepreneurship and Management Inquiries, 5(9), 289-303.

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