Performance Analysis of Turkish Banking Sector in the Context of The Problem of Asymmetric Information

Year 2016, Volume: 4 Issue: 1, 95 - 118, 01.01.2016

Ferhat Pehlivanoğlu Figen Büyükakın

Abstract

Performance Analysis of Turkish Banking Sector in the Context of The Problem of Asymmetric Information

Abstract

Financial system in a given country brings lenders and borrowers together in one place. If the system is functioning under conditions of perfect competition, allocation of credits to the most productive ventures will be streamlined as the nature of the market necessitates perfect information. However, financial system in the real world is complex and its operation deviates from conditions that the perfect competition purports. In other words, participators in real financial markets have asymmetric information as opposed to perfect information advocated in perfect competitive market. As a result of this, as lending and borrowing decisions are not “riskless” i.e. risk is unavailable in the presence of perfect information, it may comprise moral hazard problems viz. “excessive risk taking”. These cause national income to decrease, real economic activities to decline and in a worst case scenario a financial crisis to occur by hampering the functioning of financial system efficiently. More precisely, the presence of asymmetric information in financial market reduces level of market efficiency, it again causes reduction in economic efficiency as a result of wrong credit decisions in credit market and due to credit rationing, it prevents transfer of credits to investments in the economy and implementation of productive projects, thus bringing adverse effects on economic development. For this reason, especially in countries like Turkey in order to attain basic macroeconomic objectives, adverse selection and moral hazard that are caused by asymmetric information have to be lowered to the minimum. From this point forward, this study first provides conceptual explanations and literature review and then proceeds to the analysis of Turkish banking sector’s efficiency under the context of asymmetric information before and after the crisis. Data Envelopment Analysis will be used in analyzing efficiency. Furthermore, different policy recommendations aimed at solving problems and limitations will be discussed

Keywords

Turkish Banking Sector, DEA, Efficiency, Asymmetric Information.

References

• Ackerloff, George A (1970), “The Market for “Lemons”: Quality Uncertainty and the Market Mechanism Author(s)”, The Quarterly Journal of Economics, Vol.84, No.3 (Aug), pp. 488- 501.
• Adams Aster Rutibabalira (2008), Impact Of Deragulation On Cost Efficiency, Financial Performance And Shareholder Wealth Of Electric Utilities In The United States, Dissertation, s.59.
• Colell, Andrev M. And Michael D. Whinston (1995), Microeconomic Theory, New York: Oxford University Pres.
• Çolak, Ö., F., Altan, Ş., (2002), “Toplam Etkinlik Ölçümü: Türkiye.deki Özel ve Kamu Bankaları İçin Bir Uygulama.”, İşletme ve Finans, Sayı : 196, ss. 45-55.
• Diclehan, Fatih Güven (2015), Finansal Krizler ve Finansal Krizler İçin Erken Uyarı Modeli, Basılmamış Yüksek Lisans Projesi, Kocaeli Üniversitesi, Sosyal Bilimler Enstitüsü, Kocaeli.
• Erdoğan, Meltem (2008), “Bankacılık Sektöründe Asimetrik Bilgi: Sorunlar ve Çözüm Önerileri” Dumlupınar Üniversitesi Sosyal Bilimler Dergisi, Sayı. 20, ss. 1-20.
• Evans, John E. And James M. Patton (1987), “Signaling and Monitoring in Public Sector Accounting”, Journal of Accounting Research, Vol.25, pp. 130-158.
• Igawa, Kazuhiro And George Kanatas (1990), “Asimetric Information, Collateral and Moral Hazard”, The Journal Of Quantitative Analysis, Vol.25, pp. 469-490.
• Kanatas, George And Jianping Qi (2001) “İmperfect Competition, Agency and Financial Decisions” The Journal of Finance, Vol.74, pp. 307-338.
• Karabulut, Gökhan (2002), Gelişmekte Olan Ülkelerde Finansal Krizlerin Nedenleri, İstanbul: Der Yayınları.
• Kaya, T. Yasemin (2002),“Türk Bankacılık Sektöründe Karlılığın Belirleyicileri: 1997-2000”, BDDK Mali Sektör Politikaları Dairesi Çalışma Raporları, ss. 1-16.
• Kaya, T. Yasemin ve Doğan, Ela (2005), Dezenflasyon Sürecinde Türk Bankacılık Sektöründe Etkinliğin Gelişimi, BDDK: Ankara.
• Lau, K.H.(2013), Measuring Distribution Efficiency Of A Retail Network Through Data Envelopment Analysis, International Journal of Production http://dx.doi.org/10.1016/j.ijpe.2013.08.008i Economics, s.2.
• Luthans, Fred (1995), Organizational Behaviour, Turkey: Mc Graw Hill Inc.
• Mishkin, Frederic S. (1992), The Economic of Money, Banking, and Financial Markets, Addison-Wesley, 3
• Muslumov Alövsat ve Aras Güler (2004), “Kredi Piyasalarında Asimetrik Bilgi Ve Bankacılık Sistemi Üzerine Etkileri”, İktisat İşletme ve Finans, 19 (222), ss. 55 – 65.
• Nuno Ferreira da Cruz, Rui Cunha Marquez, Giulia Romano, Andrea Guerrini (2012), Measuring The Efficiency Of Water Utilities: A Cross National Comparison Between Portugal And Italy, Water Policy 14, s.846-847.
• Okay, N. C. (2003), “Tahil ve Hisse Senedi Piyasalarının Gelişmesini Engelleyen Problemler”, Pivolka, Vol.2, Sayı.8, ss. 1-26.
• Öncü, Semra ve Aktaş, Rabia (2007), “Yeniden Yapılandırma Döneminde Türk Bankacılık Sektöründe Verimlilik Değişimi”, Celal Bayar Üniversitesi İİBF, Yönetim ve Ekonomi Dergisi, Cilt:14, Sayı:1, ss. 247-266.
• Ross, Stephen A. (1973), “The Economic Theory of Agency: The Principal’s Problem”, American Economic Review, Vol.63, pp.134-139.
• Sadjadi S.J. Omrani H, Makui A, Shahanaghi K.(2011), An Interactive Robust Data Envelopment Analysis Model For Determining Alternative Targets In Iranian Electricity Distribution Companies, Expert System With Applications, s.9830.
• Stiglitz, J.E. (1981), “Information and Capital Markets”, NBER Working Paper Series, No:678.
• Stiglizt J.E. And Weiss A. (1981), “Credit Rationing in Markets With Imperfect Information.” The American Economic Review, Vol. 71, pp. 393-410.
• Tarım Armağan, (2001), Veri Zarflama Analizi Matematiksel Programlama Tabanlı Göreli Etkinlik Ölçüm Yaklaşımı, Sayıştay Yayın İşleri Müdürlüğü, 1. Basım, Çeviri Dizisi: 15, Ankara
• Thanassoulis Emmanuel (1993), A Comparison of Regression Analysis and Data Envelopment Analysis as Alternative Methodsfor Performance Assessments, The Journal of the Operational Research Society, Vol. 44, No. 11, s.1142-1143.
• Yay, Turan, Gülsün Yay ve Ensar Yılmaz (2001), Küreselleşme Sürecinde Finansal Krizler ve Finansal Düzenlemeler, İstanbul Ticaret Odası.