International Conference on Eurasian Economies
29-31 August 2016 – Kaposvár, HUNGARY
Paper detail
Paper ID : 1731
Status : Paper published
Language : English
Topic : Finance and Financial Crises
Presenter:
Session : 4A Finance
The Financial Risk Evaluation in Turkish Banking System
The Financial Risk Evaluation in Turkish Banking System
- Assoc. Prof. Dr. Semin Paksoy (Çukurova Üniversity, Türkiye)
- Ph.D. candidate Mehmet Fatih Traş (Çukurova University, Türkiye)
Abstract
Banking activities exhibit highly dynamic and evolving feature in recent years. Healthy financial position of the banks therefore gains importance in assuring well-being of all economic agents in a country. Because of banks’ key role in financial markets and real economy, banking failures or inefficient performances may have profound effects on the whole economy. For this reason, it is important to monitor the bank ratios as a strength indicator. Therefore, this paper aims to investigate financial position of the banks in Turkey. To this end, we select particular 29 ratios of the present day banks which are matching the ratios of previously failed banks between the period 1997-2003. Therefore, we construct a data set by which the banks can be categorized into two groups, namely failed and non-failed banks. Data covering the period 1996-2014 extracted from Banking Regulation and Supervision Agency. In the first place, we perform ANOVA test to evaluate the most relevant ratios for bank failure. The ANOVA test results reveal that 13 of 29 ratios are not significant. The remaining ratios are used to implement factor analysis in order to categorize ratios and calculate factor scores. Lastly, we estimate a Probit regression model to determine conditional probability of failure for a given bank. Our results show that financial position of the banks exhibits substantial variations in Turkey. Furthermore, given the data set and methods employed, most of the banks have a robust financial position and are unlikely to fail.
JEL codes: C25, C40, G33
Paksoy, Semin, Traş, Mehmet Fatih (2016). "The Financial Risk Evaluation in Turkish Banking System" in Proceedings of International Conference of Eurasian Economies 2016, pp.102-109, Kaposvár, HUNGARY.
DOI: https://doi.org/10.36880/C07.01731
