The Structure of the Turkish Banking Sector After the 2000-2001 Crisis: An Empirical Investigation

Abstract This paper aims to test the balance sheet effects of the 2000 and 2001 financial crises on the Turkish banking system. The analysis employs panel data for 54 banks that covers the disinflation periods of 2001-2004. In order to account for the size and the ownership structure, dummy variables are used. Changes in macroeconomic conditions are explained by a set of macroeconomic variables, such as GDP growth rate, annual inflation rate and average interest rates on government securities. Some banking sector specific explanatory variables are also included. The panel regression results reveal that the banks in Turkey have been restructuring their asset management and utilizing the advantages of a competitive environment in the sector. Moreover, the disinflation process in Turkey positively influences the profit margin of the banks operating in the 2001-2004 period.