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Concentration, Competition, Efficiency and Profitability of the Turkish Banking Sector in the Post-Crises Period

Author

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  • Abbasoğlu, Osman Furkan
  • Aysan, Ahmet Faruk
  • Gunes, Ali

Abstract

After 2001 crisis, the macroeconomic environment led to important changes in Turkish banking sector which has experienced a process of concentration by involving in merger and acquisition activities and liquidation of some insolvent banks. Using the data from the detailed balance sheets of the banks that operated in the years from 2001 to 2005, we examine the degree of concentration and degree of competition in the market by applying Panzar and Rosse’s approach. We also explore the existence of relationship between efficiency and profitability of the banks taking into account the internationalization of banking. Our results do not suggest the existence of relationship between concentration and competition. There is also no robust relationship between efficiency and profitability.

Suggested Citation

  • Abbasoğlu, Osman Furkan & Aysan, Ahmet Faruk & Gunes, Ali, 2007. "Concentration, Competition, Efficiency and Profitability of the Turkish Banking Sector in the Post-Crises Period," MPRA Paper 5494, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5494
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    References listed on IDEAS

    as
    1. Allen N. Berger & Timothy H. Hannan, 1998. "The Efficiency Cost Of Market Power In The Banking Industry: A Test Of The "Quiet Life" And Related Hypotheses," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 454-465, August.
    2. H. Al & Ahmet Faruk Aysan, 2006. "Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey," Working Papers 2006/06, Bogazici University, Department of Economics.
    3. Berger, Allen N & Hannan, Timothy H, 1989. "The Price-Concentration Relationship in Banking," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 291-299, May.
    4. Ahmet Faruk Aysan & L. Yildiz, 2006. "The Regulation of the Credit Card Market in Turkey," Working Papers 2006/21, Bogazici University, Department of Economics.
    5. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2006. "Why Do Foreign Banks Invest In Turkey?," MPRA Paper 5491, University Library of Munich, Germany.
    6. Ahmet Faruk Aysan & Sanli Pinar Ceyhan, 2007. "Market Disciplining Role of Crises on The Restructuring of the Turkish Banking Sector," Working Papers 2007/18, Bogazici University, Department of Economics.
    7. Smirlock, Michael, 1985. "Evidence on the (Non) Relationship between Concentration and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(1), pages 69-83, February.
    8. Wagenvoort, Rien & Schure, Paul, 1999. "Economies of Scale and Efficiency in European Banking: New Evidence," Economic and Financial Reports 1999/1, European Investment Bank, Economics Department.
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    More about this item

    Keywords

    Concentration; Competition; Efficiency; Profitability of the Turkish Banking Sector;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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