THE RELATIONSHIP BETWEEN CURRENCY-PROTECTED DEPOSITS AND BANK PERFORMANCE: CASE OF PARTICIPATION BANKS

Year 2023, , 45 - 54, 31.03.2023

Mustafa Yurttadur Mehmet Zafer Tascı

https://doi.org/10.17261/Pressacademia.2023.1720

Abstract

Purpose- This study aims to investigate in which way the foreign Currency Protected Deposit (CPD) system that was put on effect from the 21st of December 2021 affected the performance of the participation banks in Turkey. For this purpose, the financial performance of the participation banks during the 12 months preceding and the 9 months following the carrying into action of CPD has been measured by the means of CRITIC and WAPAS that are methods of the Multi-Criteria Decision Making (MCDM) model.
Methodology: The data used within the scope of this study covers the 12 months of the year 2021 and the 9 months of the year 2022 in reason of the fact that 9 months data was available for 2021. The financial performance of the participation banks was assessed based on 5 criteria that are the total dividend revenues, return on assets, return on equity, operating cost/total assets, foreign assets/total shareholder’s equity
Findings- It has been established that the most significant criterion in determining the financial performance of the participation banks is the operating cost/total assets while the least significant criterion is the return on equity. Furthermore, within the period that is investigated; the participation banks showed the worst performance in May 2021 and the best in September 2022.
Conclusion- Consequently the performance of the participation banks showed a fluctuation and got down through 2021. Following the carrying into effect of the foreign Currency Protected Deposit (CPD) system, there has been a bettering in the financial performance of the participation banks in 2022; within a couple of months their performance kept raising.

Keywords

Participation banks, financial analysis, financial performance, MCDM, banking sector

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