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Determinants of Bank Stability: A Financial Statement Analysis of Turkish Banks

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  • Gamze Öztürk DANIŞMAN

Abstract

This paper attempts a financial statement analysis of Turkish banks and explores the determinants of bank stability, as proxied by non-performing loans ratio, using annual data on 27 Turkish banks for the years 2007-2015. We employ dynamic panel data estimation techniques by using the system GMM estimation techniques. Our results indicate that the significant determinants of NPLs that are able to explain the credit risk of Turkish banks include return on assets (ROA), loans to asset ratio, inefficiency index, non-interest income share and loan loss provisions share. We contribute to the literature by properly accounting for endogeneity with adequate specification and validation tests.

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  • Gamze Öztürk DANIŞMAN, 2018. "Determinants of Bank Stability: A Financial Statement Analysis of Turkish Banks," Sosyoekonomi Journal, Sosyoekonomi Society, issue 26(38).
    • Handle: RePEc:sos:sosjrn:180406
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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