Turkish Banking Industry: A CAMELS Analysis

  • Muhammed Habib Dolgun
  • Lokman Gündüz
Chapter

Abstract

In this paper, the Turkish banking system is assessed using a CAMELS approach with a focus on recent financial developments. The analysis shows that the return on assets and return on equity of the Turkish banking industry are relatively at a satisfactory level. An increase in the profitability would strengthen capital and a slowdown in the loan growth rate limits the risk-weighted asset growth. The Turkish banking system continues to remain resilient to interest rate shocks and maintains its resilience to exchange rate risk. Both opportunities and challenges of Turkey’s financial industry are also discussed in this paper. As an opportunity, there is ample room for the development and diversification of financial markets, institutions, and instruments. However, relying mostly on the banking sector, increasing the credit-to-deposits ratio, tightening global liquidity conditions, and depending on foreign capital inflows are regarded as important challenges for the Turkish financial sector.

Keywords

Financial markets Banking CAMELS Liquidity Capital inflows Credit 

JEL Codes

E440 G200 G210 G320 G380 

References

  1. Akıncı, Derviş Ahmet, Roman Matousek, Nemanja Radić, and Chris Stewart. 2013. Monetary Policy and the Banking Sector in Turkey. Journal of International Financial Markets Institutions and Money 27: 269–285.CrossRefGoogle Scholar
  2. Aydemir, Resul. 2014. Competition and Collusion in the Turkish Banking Industry. Emerging Markets Finance and Trade 49: 31–40.CrossRefGoogle Scholar
  3. Aysan, Ahmet Faruk, and Şanli Pinar Ceyhan. 2008. What Determines the Banking Sector Performance in Globalized Financial Markets? The Case of Turkey. Physica A: Statistical Mechanics and its Applications 387 (7): 1593–1602.CrossRefGoogle Scholar
  4. Aysan, Ahmet Faruk, Güzin Gülsün Akin, and Levent Yildiran. 2009. Transformation of the Turkish Financial Sector in the Aftermath of the 2001 Crisis. In Turkish Economy in the Post-Crisis Era: The New Phase of Neo-Liberal Restructuring and Integration to the Global Economy, ed. Ziya Onis and Fikret Senses, 67–83. London: Routledge.Google Scholar
  5. ———. 2013. Demand and Competition Analysis in the Turkish Deposit and Credit Markets. Emerging Markets Finance and Trade 49 (5): 41–58.Google Scholar
  6. Aysan, Ahmet Faruk, Mustafa Dişli, and Koen Schoors. 2014. Bank Competition and Outreach: Evidence from Turkey. Emerging Markets Finance and Trade 49: 7–30.CrossRefGoogle Scholar
  7. Aysan, Ahmet Faruk, Salih Fendoğlu, and Mustafa Kılınç. 2015. Macroprudential Policies as Buffer Against Volatile Cross-border Capital Flows. The Singapore Economic Review 62 (01): 5–25.CrossRefGoogle Scholar
  8. Banking Regulation and Supervision Agency. 2016. Turkish Banking Sector Interactive Monthly Bulletin. www.ebulten.bddk.org.tr
  9. Central Bank of the Republic of Turkey 2015. Financial Stability Report, November 2016, www.tcmb.gov.tr.
  10. ——— 2016. Financial Stability Report, November 2016. www.tcmb.gov.tr
  11. Fukuyama, Hirofumi, and Roman Matousek. 2011. Efficiency of Turkish Banking: Two-Stage Network System Variable Returns to Scale Model. Journal of International Financial Markets Institutions and Money 21 (1): 75–91.CrossRefGoogle Scholar
  12. Süer, Ömür, Haluk Levent, and Süleyman Şen. 2016. Foreign Entry and the Turkish Banking System. North American Journal of Economics and Finance 37: 420–435.CrossRefGoogle Scholar
  13. Turgutlu, Evrim. 2010. Cyclical Behaviour of Price-Cost Margins in the Turkish Banking Industry. Economic Modelling 27: 368–374.CrossRefGoogle Scholar
  14. Yener, Altunbaş, A. Kara, and Özlem Olgu. 2007. Turkish Banking-Banking Under Political Instability and Chronic High Inflation. London: Palgrave Macmillan.Google Scholar
  15. Yıldırım, Canan. 2014. Competition in Turkish Banking: Impacts of Restructuring and the Global Financial Crisis. The Developing Economies 52: 95–124.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Muhammed Habib Dolgun
    • 1
  • Lokman Gündüz
    • 2
  1. 1.CBRTAnkaraTurkey
  2. 2.Department of ManagementCollege of Management and Administrative Sciences, Istanbul Sehir UniversityİstanbulTurkey

Personalised recommendations