Competitiveness in Turkish Banking: 2002-2011 - Economic Research Forum (ERF)

Competitiveness in Turkish Banking: 2002-2011

Nurhan Davutyan and Canan Yildirim


Date:
September, 2013

NO.
774

Length:
31 pages

Topic:
D2. Production and Organizations
G2. Financial Institutions and Services

Using a novel approach, we derive “shadow unrealized profit scores” as well as “shadow input-output prices” for each year and bank in the Turkish banking sector from 2002 to 2011. We demonstrate that these scores operationalize the Hicksian concept of “monopolistic quiet life.” We show that the Turkish banking sector came closer to the “zero profit condition” over time. Similarly, the variances of “shadow prices” exhibit a significant decline over our sample period, indicating a closer approximation to the “law of one price”. We conclude that there are differences in profit efficiency between banks with different ownership types and sizes. In particular, state-owned banks display the lowest inefficiency while foreign-owned banks the highest. Finally we find total asset and branch network sizes are positively related to profit efficiency, implying important scale and scope economies.

 

ملخص

باستخدام نهج جديد، نستمد “ظل الأرباح غير المحققة”، وكذلك “ظل أسعار المدخلات والمخرجات” عن كل سنة وبنك في القطاع المصرفي التركي 2002-2011. علينا أن نظهر أن هذه الحسابات تفعل مفهوم Hicksian من مبدأ “حياة هادئة الاحتكارية.” علينا أن نظهر أن القطاع المصرفي التركي جاء أقرب إلى “حالة الربح الصفرى” مع مرور الوقت. وبالمثل، فإن الفروق من “أسعار الظل” تظهر انخفاضا كبيرا خلال فترة عينة لدينا، مما يدل على تقريب إلى “قانون السعر الواحد”. نستنتج أن هناك اختلافات في كفاءة الربح بين البنوك مع أنواع الملكية والأحجام مختلفة. وعلى وجه الخصوص، وعرض البنوك المملوكة للدولة بأقل مستوى من عدم الكفاءة في حين أن البنوك المملوكة للأجانب على أعلى مستوى. وأخيرا نجد ان مجموع الأصول والأحجام شبكة الفروع ترتبط بشكل إيجابي مع كفاءة الربح، مما يعني مقياس مهم.
Research Fellows

Nurhan Davutyan

Professor and Head, Department of International Trade and Finance, Kadir Has University


Canan Yildirim


Project

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