Bank-specific and Macroeconomic Determinants of Bank Profitability: Case of Turkey

Abstract

The aim of this study is to analyze the impact of bank-specific and macroeconomic determinants of bank profitability for 25 commercial banks in Turkey for the period of 2001-2010. We categorize those banks into three (3) groups as follow: Public, Private and Foreign Banks. A panel regression is used to carry empirical investigation based on the unique feature of the 3 categories mentioned above; then a general model is formulated to check the combined effect of bank-specific and macro-economic variables on commercial bank profitability in Turkey. It is important to consider the 3 categories of banks separately to identify peculiar hypothesis for each model and compare the bank profitability factored on different ownership structure. In addition, this study examines the impact of the sub-prime mortgage crisis of 2008 and also includes the consequences of 2001 national crisis in Turkey and sees the impacts of it as well on those selected commercial banks. Some similar study such of Alper and Anbar (2011) has been done but in our case, we try to evaluate the bank-specific and macroeconomic determinants in different groups and also emphasizing their performance during the crisis.