Analysis of the macroeconomic factors determining the asset profitability of the Turkish banking system in the period of 2010-2020

Abstract

Purpose: The aim of the study is to analyze domestic and international macro-economic factors affecting the profitability rates of the Turkish banking sector, in the period 2010-2020 as capital movements are quite volatile.

Methodology: Thus, it will be investigated whether global factors or domestic economic conditions are more effective on bank vulnerability. ARDL and Error Correction Models were used to analyze the short and long term relationships between variables.

Findings: ARDL bounds test findings show that there is a cointegration relationship between bank profitability and selected macro-economic variables in the long run. In this respect, we can say that there is a causal link between all variables considered in the number one functional relationship and ROA.

Originality/Value: This study contributed to the Turkish literature by examining the macroeconomic determinants of bank profitability with ARDL method.