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The Effect of Sectoral Costs on Non-Performing Loans: An Investigation on the Construction Industry

Author

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  • Osman Emre Arlı

    (Mugla Sitki Kocman University)

  • Ali Bayrakdaroğlu

    (Mugla Sitki Kocman University)

Abstract

In this study, it is aimed to determine the relationship between changes in sectoral costs and non-performing loans. With the construction cost index prepared by TUIK as the base year of 2015, a time series was created from the BDDK’s monthly banking sector data. It consists of monthly data between January 2015 and November 2019 and includes 59 observations. In order to express the relationship between sectoral costs and non-performing loan, Unit Root Tests, Johansen Cointegration Test and Granger Causality analyzes were conducted. Accordingly, it has been observed that the construction sector cost and the non-performing loans of the construction sector are co-integrated both in the short term and the long term. According to the Granger causality analysis, sectoral costs and non-performing loans are the causes of each other.

Suggested Citation

  • Osman Emre Arlı & Ali Bayrakdaroğlu, 2021. "The Effect of Sectoral Costs on Non-Performing Loans: An Investigation on the Construction Industry," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 36(Special2), pages 131-144, January.
    • Handle: RePEc:acc:malfin:v:36:y:2021:i:special2:p:131-144
    DOI: https://doi.org/10.33203/mfy.843836
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    Keywords

    Non-performing Loans; Sectoral Costs; Cointegration; Causality;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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