Research Article
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Year 2016, , 341 - 350, 30.12.2016
https://doi.org/10.17261/Pressacademia.2017.356

Abstract

References

  • Abdioglu, N. & Aytekin, S. 2016, “Assessing the factors that impact non-performing loan ratio: an application on deposit banks by using dynamic panel data”, Journal of Business Research Turk, vol. 8, no. 1, pp. 538-555.
  • Aiyar, S., Bergthaler, W., Garrido, J.M., Ilyina, A., Jobst, A., Kang, K., Kovtun, D., Liu, Y., Monaghan, D. & Moretti, M. 2015, “A strategy for resolving Europe’s problem loans”, IMF Staff Discussion Note, No. 15/19.
  • Ashraf, B.N., Arshad, S. & Hu, Y. 2016, “Capital regulation and bank risk-taking behavior: evidence from Pakistan”, International Journal of Financial Studies, vol. 4, no.3, pp. 1-20.
  • Bardhan, S. & Mukherjee, V. 2016, “Bank-specific determinants of nonperforming assets of Indian banks”, International Economics and Economic Policy, vol. 13, no.3, pp. 483–498.
  • Barseghyan, L. 2010, “Non-performing loans, prospective bailouts, and Japan’s slow-down”, Journal of Monetary Economics, vol. 57, no. 7, pp. 873–890.
  • Baselga-Pascual, L., Trujillo-Ponce, A. & Cardone-Riportella, C. 2015, “Factors influencing bank risk in Europe: evidence from the financial crisis”,North American Journal of Economics and Finance, vol. 34, no. C, pp. 138–166.
  • Berger, A. & DeYoung, R. 1997, “Problem loans and cost efficiency in commercial banks”, Journal of Banking and Finance, vol. 21, no. 6, pp. 849–870.
  • Bholat, D., Lastra, R., Markose, S., Miglionico, A. & Sen, K. 2016, “Non-performing loans: regulatory and accounting treatments of assets”,Bank of England Staff Working Paper, No. 594.
  • Boudriga, A., Taktak, N.B. & Jellouli, S. 2009, ”Bank specific, business and institutional environment determinants of nonperforming loans: evidence from MENA countries”, Economic Research Forum, Working Paper 547.
  • Castro, V. 2013,“Macroeconomic determinants of the credit risk in the banking system: the case of the GIPSI”, Economic Modelling, vol. 31, no. C, pp. 672-683.
  • Chaibi, H. & Ftiti, Z. 2015, “Credit risk determinants: evidence from a cross-country study”, Research in International Business and Finance, vol. 33, pp. 1-16.
  • Curak, M., Pepur, S. & Poposki, K. 2013, “Determinants of non-performing loans – evidence from Southeastern European banking systems”, Banks and Bank Systems, vol. 8, no. 1, pp. 45-53.
  • Demirguc-Kunt, A. 1989, “Deposit-institution failures: a review of empirical literature”, Economic Review, vol. 25, no. 4, pp. 2-18.
  • Demirguc-Kunt, A. & Detragiache, E. 1998, “The determinants of banking crises and developed countries”, IMF Staff Papers, vol. 45, no. 1, pp. 81–109.
  • Espinoza, R. & Prasad, A. 2010, “Nonperforming loans in the GCC banking systems and their macroeconomic effects”, IMF Working Paper, No. 10/224.
  • Ghosh, A. 2015, “Banking-industry specific and regional economic determinants of non-performing loans: evidence from US states”, Journal of Financial Stability, vol. 20, pp. 93-104.
  • Gujarati, D.N. 2004, “Basic Econometrics (4th ed.)”, The McGraw-Hill Companies, Avenue of the Americas, New York.
  • Hu, J., Yang, L., & Yung, H. C. 2004, “Ownership and non-performing loans: evidence from Taiwan’s banks”, Developing Economies, vol. 42, no. 3, pp. 405-420.
  • İskenderoğlu, Ö. & Tomak, S. 2013, ”Competition and stability: an analysis of the Turkish banking system”, International Journal of Economics and Financial Issues, Vol. 3, No. 3, pp.752-762 .
  • Jakubik, P. & Reininger, T. 2013, “Determinants of nonperforming loans in Central, Eastern and Southeastern Europe, focus on European economic integration”, OesterreichischeNationalbank, vol. 3,pp. 48–66.
  • Jassaud, N. & Kang, K. 2015, “A strategy for developing a market for nonperforming loans in Italy”, IMF Working Paper, No. 15/24.
  • Kasman, S. & Kasman, A. 2015, “Bank competition, concentration and financial stability in the Turkish banking industry”, Economic Systems, vol. 39, no. 3, pp. 502–517.
  • Klein, N. 2013,“Non-performing loans in CESEE: determinants and impact on macroeconomic performance”, International Monetary Fund Working Paper, No. 13/72.
  • Louizis, D., Vouldis, A. & Metaxas, V. 2012, “Macroeconomic and bank-specific determinants on non-performing loans in Greece: acomparative study of mortgage, business and consumer loan portfolios”, Journal of Banking & Finance, vol. 36,pp. 1012–1027.
  • Makri, V., Tsagkanos, A. &Bellas, A. 2014,“Determinants of non-performing loans: the case of Eurozone”, Panoeconomicus, vol. 61, no. 2, pp. 193-206.
  • Messai, A.S. & Jouini, F. 2013, “Micro and macro determinants of non-performing loans”, International Journal of Economics and Financial Issues,vol. 3, no. 4, pp. 852-860.
  • Nkusu, M. 2011, “Nonperforming loans and macro financial vulnerabilities in advanced economies”, International Monetary Fund Working Paper,No. 11/161.
  • Podpiera, J. & Weill, L. 2008, “Bad luck or bad management? emerging banking market experience”, Journal of Financial Stability, vol. 4, no. 2, pp. 135–148.
  • Reinhart, C. & Rogoff, K. 2011, “From financial crash to debt crisis”, American Economic Review, vol. 101, no. 5, pp. 1676–1706.
  • Sawada, M. 2013, “How does the stock market value bank diversification? empirical evidence from Japanese banks”, Pacific-Basin Finance Journal, vol. 25, pp. 40–61.
  • Singh, A., & Sharma, A.K. 2016, “An empirical analysis of macroeconomic and bank-specific factors affecting liquidity of Indian banks”, Future Business Journal, vol. 2, no. 1, pp. 40–53.
  • Skarica, B. 2014, “Determinants of non-performing loans in Central and Eastern European Countries”, Financial Theory & Practice, vol. 38, no. 1, pp. 37–59.
  • Sorge, M. 2004, “Stress-testing financial systems: an overview of current methodologies”, BIS Working Paper, No. 165.
  • Us, V. 2016, “Determinants of Non-Performing Loans in the Turkish Banking Sector: What Has Changed After the Global Crisis?”, Ekonomi Notlari, No. 16/27:1-14.
  • Vardar, G. 2015, ”Bank Competition, Concentration and Risk-Taking in the Turkish Banking Industry”, Journal of Business, Economics and Finance, Vol. 4, No. 3, 536-567.
  • Yağcılar, G.G. & Demir, S. 2015, “Determination of the factors effecting non-performing loans in Turkish banking sector”, International Journal of Alanya Faculty of Business, vol. 7, no. 1, pp. 221-229.
  • Zeng, S. 2012, “Bank non-performing loans (NPLs): a dynamic model and analysis in China”, Modern Economy, vol. 3, no. 1, pp. 100–110.

DETERMINANTS OF NON-PERFORMING LOANS OF DEPOSIT BANKS IN TURKEY

Year 2016, , 341 - 350, 30.12.2016
https://doi.org/10.17261/Pressacademia.2017.356

Abstract

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. 

References

  • Abdioglu, N. & Aytekin, S. 2016, “Assessing the factors that impact non-performing loan ratio: an application on deposit banks by using dynamic panel data”, Journal of Business Research Turk, vol. 8, no. 1, pp. 538-555.
  • Aiyar, S., Bergthaler, W., Garrido, J.M., Ilyina, A., Jobst, A., Kang, K., Kovtun, D., Liu, Y., Monaghan, D. & Moretti, M. 2015, “A strategy for resolving Europe’s problem loans”, IMF Staff Discussion Note, No. 15/19.
  • Ashraf, B.N., Arshad, S. & Hu, Y. 2016, “Capital regulation and bank risk-taking behavior: evidence from Pakistan”, International Journal of Financial Studies, vol. 4, no.3, pp. 1-20.
  • Bardhan, S. & Mukherjee, V. 2016, “Bank-specific determinants of nonperforming assets of Indian banks”, International Economics and Economic Policy, vol. 13, no.3, pp. 483–498.
  • Barseghyan, L. 2010, “Non-performing loans, prospective bailouts, and Japan’s slow-down”, Journal of Monetary Economics, vol. 57, no. 7, pp. 873–890.
  • Baselga-Pascual, L., Trujillo-Ponce, A. & Cardone-Riportella, C. 2015, “Factors influencing bank risk in Europe: evidence from the financial crisis”,North American Journal of Economics and Finance, vol. 34, no. C, pp. 138–166.
  • Berger, A. & DeYoung, R. 1997, “Problem loans and cost efficiency in commercial banks”, Journal of Banking and Finance, vol. 21, no. 6, pp. 849–870.
  • Bholat, D., Lastra, R., Markose, S., Miglionico, A. & Sen, K. 2016, “Non-performing loans: regulatory and accounting treatments of assets”,Bank of England Staff Working Paper, No. 594.
  • Boudriga, A., Taktak, N.B. & Jellouli, S. 2009, ”Bank specific, business and institutional environment determinants of nonperforming loans: evidence from MENA countries”, Economic Research Forum, Working Paper 547.
  • Castro, V. 2013,“Macroeconomic determinants of the credit risk in the banking system: the case of the GIPSI”, Economic Modelling, vol. 31, no. C, pp. 672-683.
  • Chaibi, H. & Ftiti, Z. 2015, “Credit risk determinants: evidence from a cross-country study”, Research in International Business and Finance, vol. 33, pp. 1-16.
  • Curak, M., Pepur, S. & Poposki, K. 2013, “Determinants of non-performing loans – evidence from Southeastern European banking systems”, Banks and Bank Systems, vol. 8, no. 1, pp. 45-53.
  • Demirguc-Kunt, A. 1989, “Deposit-institution failures: a review of empirical literature”, Economic Review, vol. 25, no. 4, pp. 2-18.
  • Demirguc-Kunt, A. & Detragiache, E. 1998, “The determinants of banking crises and developed countries”, IMF Staff Papers, vol. 45, no. 1, pp. 81–109.
  • Espinoza, R. & Prasad, A. 2010, “Nonperforming loans in the GCC banking systems and their macroeconomic effects”, IMF Working Paper, No. 10/224.
  • Ghosh, A. 2015, “Banking-industry specific and regional economic determinants of non-performing loans: evidence from US states”, Journal of Financial Stability, vol. 20, pp. 93-104.
  • Gujarati, D.N. 2004, “Basic Econometrics (4th ed.)”, The McGraw-Hill Companies, Avenue of the Americas, New York.
  • Hu, J., Yang, L., & Yung, H. C. 2004, “Ownership and non-performing loans: evidence from Taiwan’s banks”, Developing Economies, vol. 42, no. 3, pp. 405-420.
  • İskenderoğlu, Ö. & Tomak, S. 2013, ”Competition and stability: an analysis of the Turkish banking system”, International Journal of Economics and Financial Issues, Vol. 3, No. 3, pp.752-762 .
  • Jakubik, P. & Reininger, T. 2013, “Determinants of nonperforming loans in Central, Eastern and Southeastern Europe, focus on European economic integration”, OesterreichischeNationalbank, vol. 3,pp. 48–66.
  • Jassaud, N. & Kang, K. 2015, “A strategy for developing a market for nonperforming loans in Italy”, IMF Working Paper, No. 15/24.
  • Kasman, S. & Kasman, A. 2015, “Bank competition, concentration and financial stability in the Turkish banking industry”, Economic Systems, vol. 39, no. 3, pp. 502–517.
  • Klein, N. 2013,“Non-performing loans in CESEE: determinants and impact on macroeconomic performance”, International Monetary Fund Working Paper, No. 13/72.
  • Louizis, D., Vouldis, A. & Metaxas, V. 2012, “Macroeconomic and bank-specific determinants on non-performing loans in Greece: acomparative study of mortgage, business and consumer loan portfolios”, Journal of Banking & Finance, vol. 36,pp. 1012–1027.
  • Makri, V., Tsagkanos, A. &Bellas, A. 2014,“Determinants of non-performing loans: the case of Eurozone”, Panoeconomicus, vol. 61, no. 2, pp. 193-206.
  • Messai, A.S. & Jouini, F. 2013, “Micro and macro determinants of non-performing loans”, International Journal of Economics and Financial Issues,vol. 3, no. 4, pp. 852-860.
  • Nkusu, M. 2011, “Nonperforming loans and macro financial vulnerabilities in advanced economies”, International Monetary Fund Working Paper,No. 11/161.
  • Podpiera, J. & Weill, L. 2008, “Bad luck or bad management? emerging banking market experience”, Journal of Financial Stability, vol. 4, no. 2, pp. 135–148.
  • Reinhart, C. & Rogoff, K. 2011, “From financial crash to debt crisis”, American Economic Review, vol. 101, no. 5, pp. 1676–1706.
  • Sawada, M. 2013, “How does the stock market value bank diversification? empirical evidence from Japanese banks”, Pacific-Basin Finance Journal, vol. 25, pp. 40–61.
  • Singh, A., & Sharma, A.K. 2016, “An empirical analysis of macroeconomic and bank-specific factors affecting liquidity of Indian banks”, Future Business Journal, vol. 2, no. 1, pp. 40–53.
  • Skarica, B. 2014, “Determinants of non-performing loans in Central and Eastern European Countries”, Financial Theory & Practice, vol. 38, no. 1, pp. 37–59.
  • Sorge, M. 2004, “Stress-testing financial systems: an overview of current methodologies”, BIS Working Paper, No. 165.
  • Us, V. 2016, “Determinants of Non-Performing Loans in the Turkish Banking Sector: What Has Changed After the Global Crisis?”, Ekonomi Notlari, No. 16/27:1-14.
  • Vardar, G. 2015, ”Bank Competition, Concentration and Risk-Taking in the Turkish Banking Industry”, Journal of Business, Economics and Finance, Vol. 4, No. 3, 536-567.
  • Yağcılar, G.G. & Demir, S. 2015, “Determination of the factors effecting non-performing loans in Turkish banking sector”, International Journal of Alanya Faculty of Business, vol. 7, no. 1, pp. 221-229.
  • Zeng, S. 2012, “Bank non-performing loans (NPLs): a dynamic model and analysis in China”, Modern Economy, vol. 3, no. 1, pp. 100–110.
There are 37 citations in total.

Details

Journal Section Articles
Authors

Ozcan Isik

Suleyman Bolat

Publication Date December 30, 2016
Published in Issue Year 2016

Cite

APA Isik, O., & Bolat, S. (2016). DETERMINANTS OF NON-PERFORMING LOANS OF DEPOSIT BANKS IN TURKEY. Journal of Business Economics and Finance, 5(4), 341-350. https://doi.org/10.17261/Pressacademia.2017.356

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