IDEAS home Printed from https://ideas.repec.org/a/ist/ekoist/v0y2023i39p172-182.html
   My bibliography  Save this article

Determining the Relationship Between Capital Adequacy Ratio and Financial Ratios with Panel Data Analysis: A Study on the Turkish Banking Sector

Author

Listed:
  • Batuhan Medetoğlu

    (Mehmet Akif Ersoy Üniversitesi, Ağlasun Meslek Yüksekokulu, Finans, Bankacılık ve Sigortacılık Bölümü, Burdur, Türkiye)

Abstract

Banking is institutions that act as intermediaries and perform activities determined by law in order to meet the financial needs of units that supply and demand funds. In addition to accepting deposits and lending, transactions such as factoring, leasing, and intermediation in the capital market are also carried out by banks. Banks have an important place in the financial system in terms of asset size and volume. It is important for banks to be financially strong for a sustainable economic structure. For a sustainable structure, the capital adequacy ratio created by the Basel process, which took place after the 1974 oil crisis, is considered an important indicator for banks and it is stated that it is important that it is at least 8%. The capital adequacy ratio, which is also used to prevent risks from being encountered, is accepted as one of the basic indicators of the banks. This study was carried out to determine the relationship between the capital adequacy ratios of banks and their financial ratios. Within the scope of the study, the 10 banks with the highest asset size in 2021 were accepted as the sample. Capital adequacy ratios of banks are taken as a dependent variable, and a financial ratio of 7 is taken as an independent variable. The data obtained covers the years 2011-2021. Panel data analysis was used as a method to determine the relationship between capital adequacy ratio and financial ratios. As a result of the study, it was concluded that there is a statistically significant relationship between the capital adequacy ratio and all financial ratios. The direction and coefficients of the financial ratios that have a statistically significant relationship with the capital adequacy ratio were interpreted and evaluations were made. In the study, it is thought that the determination of the financial ratios that affect the capital adequacy ratio is important, and performing analyses using financial ratios and capital adequacy ratios in different periods is offered as a suggestion to valuable researchers, institutions, and industry stakeholders.

Suggested Citation

  • Batuhan Medetoğlu, 2023. "Determining the Relationship Between Capital Adequacy Ratio and Financial Ratios with Panel Data Analysis: A Study on the Turkish Banking Sector," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(39), pages 172-182, December.
    • Handle: RePEc:ist:ekoist:v:0:y:2023:i:39:p:172-182
    DOI: :10.26650/ekoist.2023.39.1244794
    as

    Download full text from publisher

    File URL: https://cdn.istanbul.edu.tr/file/JTA6CLJ8T5/9425D27B86904A79BEA56FC7574B3165
    Download Restriction: no
    File URL: https://iupress.istanbul.edu.tr/tr/journal/ekoist/article/sermaye-yeterlilik-orani-ile-finansal-rasyolar-arasindaki-iliskinin-panel-veri-analizi-ile-tespiti-turk-bankacilik-sektoru-uzerine-bir-calisma
    Download Restriction: no
    File URL: https://libkey.io/:10.26650/ekoist.2023.39.1244794?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Baltagi, Badi H. & Feng, Qu & Kao, Chihwa, 2012. "A Lagrange Multiplier test for cross-sectional dependence in a fixed effects panel data model," Journal of Econometrics, Elsevier, vol. 170(1), pages 164-177.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Iheonu O Chimere & Tochukwu Nwachukwu, 2020. "Macroeconomic determinants of household consumption in selected West African countries," Economics Bulletin, AccessEcon, vol. 40(2), pages 1596-1606.
    2. Nicholas M. Odhiambo & Talknice Saungweme, "undated". "Does International Tourism Spur International Trade In Ssa Countries? A Dynamic Panel Data Analysis," Working Papers AESRI07, African Economic and Social Research Institute (AESRI).
    3. Muntasir Murshed & Seemran Rashid, 2020. "An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia," The Economics and Finance Letters, Conscientia Beam, vol. 7(1), pages 23-46.
    4. Gangopadhyay, Partha & Jain, Siddharth & Bakry, Walid, 2022. "In search of a rational foundation for the massive IT boom in the Australian banking industry: Can the IT boom really drive relationship banking?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    5. Hyunseok Jung & Xiaodong Liu, 2023. "Testing for Peer Effects without Specifying the Network Structure," Papers 2306.09806, arXiv.org, revised Jul 2024.
    6. Ben-Salha, Ousama & Dachraoui, Hajer & Sebri, Maamar, 2021. "Natural resource rents and economic growth in the top resource-abundant countries: A PMG estimation," Resources Policy, Elsevier, vol. 74(C).
    7. Westerlund, Joakim & Sharma, Susan Sunila, 2019. "Panel evidence on the ability of oil returns to predict stock returns in the G7 area," Energy Economics, Elsevier, vol. 77(C), pages 3-12.
    8. Aladejare, Samson Adeniyi, 2022. "Natural resource rents, globalisation and environmental degradation: New insight from 5 richest African economies," Resources Policy, Elsevier, vol. 78(C).
    9. Mohammad Reza Farzanegan & Hassan F. Gholipour & Mostafa Javadian, 2023. "Air pollution and internal migration: evidence from an Iranian household survey," Empirical Economics, Springer, vol. 64(1), pages 223-247, January.
    10. Usman, Muhammad & Makhdum, Muhammad Sohail Amjad, 2021. "What abates ecological footprint in BRICS-T region? Exploring the influence of renewable energy, non-renewable energy, agriculture, forest area and financial development," Renewable Energy, Elsevier, vol. 179(C), pages 12-28.
    11. Cuicui Ding & Khatib Ahmad Khan & Hauwah K. K. AbdulKareem & Siddharth Kumar & Leon Moise Minani & Shujaat Abbas, 2024. "Towards a healthier future for the achievement of SDGs: unveiling the effects of agricultural financing, energy poverty, human capital, and corruption on malnutrition," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-12, December.
    12. Ghannouchi, Imen, 2023. "Examining the dynamic nexus between industry 4.0 technologies and sustainable economy: New insights from empirical evidence using GMM estimator across 20 OECD nations," Technology in Society, Elsevier, vol. 75(C).
    13. Damien Kunjal, 2022. "Evaluating the Liquidity Response of South African Exchange-Traded Funds to Country Risk Effects," Economies, MDPI, vol. 10(6), pages 1-20, June.
    14. Shinwari, Riazullah & Wang, Yangjie & Gozgor, Giray & Mousavi, Mahdi, 2024. "Does FDI affect energy consumption in the belt and road initiative economies? The role of green technologies," Energy Economics, Elsevier, vol. 132(C).
    15. Shobande, Olatunji A. & Asongu, Simplice A., 2022. "The Critical Role of Education and ICT in Promoting Environmental Sustainability in Eastern and Southern Africa: A Panel VAR Approach," Technological Forecasting and Social Change, Elsevier, vol. 176(C).
    16. Hikmet Akyol & Selim Basar, 2024. "Empirical Analysis of Turkish Banking Sector Institutional and Macroeconomic Determinants of Risks," Istanbul Journal of Economics-Istanbul Iktisat Dergisi, Istanbul University, Faculty of Economics, vol. 73(74-1), pages 59-98, June.
    17. Juhro, Solikin M. & Iyke, Bernard Njindan & Narayan, Paresh Kumar, 2021. "Interdependence between monetary policy and asset prices in ASEAN-5 countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    18. Predrag Petrović, 2023. "Economic sustainability of energy conservation policy: improved panel data evidence," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(2), pages 1473-1491, February.
    19. Rajarathinam & A. & Suba & S.S., 2023. "Fully Modified Least Squares Modeling Of Wheat Crop Production," Journal of Statistical and Econometric Methods, SCIENPRESS Ltd, vol. 12(1), pages 1-4.
    20. Eleftherios Thalassinos & Marta Kadłubek & Le Minh Thong & Tran Van Hiep & Erginbay Ugurlu, 2022. "Managerial Issues Regarding the Role of Natural Gas in the Transition of Energy and the Impact of Natural Gas Consumption on the GDP of Selected Countries," Resources, MDPI, vol. 11(5), pages 1-22, April.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ist:ekoist:v:0:y:2023:i:39:p:172-182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ertugrul YASAR (email available below). General contact details of provider: https://edirc.repec.org/data/ifisttr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.