ASSESSING THE IMPACT OF LIQUIDITY ON PROFITABILITY: AN EVIDENCE FROM TURKISH BANKING SECTOR


Öndeş T., Binte Osman A.

IBAD Sosyal Bilimler Dergisi, sa.7, ss.393-402, 2020 (Hakemli Dergi)

Özet

ASSESSING THE IMPACT OF LIQUIDITY ON PROFITABILITY: AN EVIDENCE FROM TURKISH BANKING SECTOR


Abstract

The purpose of this study is to assess the impact of liquidity and profitability of Turkish banks. The study is based on panel data collected from website of the Association of Banks of Turkey. We select 10 biggest banks of Turkey based on asset size as on 31.12.2017 and used 10 years data ranging from 2008-2017. Loan Deposit, Deposit Asset, Liquid Asset to TA, Liquid Asset to Short- term Liability and Liquid Assets to Deposits and Non-Deposit Resources Ratio has been considered as a proxy of liquidity and average ROA and average ROE has been considered as a proxy of profitability. We analyze the data through statistical techniques namely descriptive statistics, correlations and regressions with the support of EViews 8.  We run Random effect model in our study. The results of the study reveal that Loan Deposit Ratio has significant negative influence on both ROE and ROA. Liquid Asset to Total Asset ratio also has significant negative influence on both ROE and ROA. Deposit Asset Ratio has a significant negative influence on ROA but insignificant negative influence on ROE. Moreover, Liquid Asset to Deposit and Non-Deposit Resources Ratio has a significant negative impact on ROE but insignificant positive impact on ROA.

Key Words: Liquidity, Profitability, Banking Sector, Turkey.