Title: Bank-specific determinants of deposit banks profitability in a highly dollarised economy: evidence from Turkey

Authors: Haşmet Sarıgül

Addresses: Faculty of Business and Management Sciences, Istanbul Esenyurt University, Zafer Mah. Adile Naşit Bulvarı No. 1, Esenyurt İstanbul, Turkey

Abstract: The purpose of this study is to explore banks' profitability determinants in highly dollarised Turkish economy. A panel autoregressive distributed lag model with quarterly data on Turkish deposit banks for the period 2005Q1–2021Q4 is used to analyse long- and short-run relationships between the variables. All the dollarisation-related variables in the estimation model – deposit dollarisation, foreign currency open position, and foreign currency financial derivatives – appear to be statistically significant factors that adversely impact the profitability of Turkish deposit banks in the long-run. The estimation model also includes a set of other bank-specific variables, among which the off-balance engagements, overhead rate, market share, and capital-to-asset ratio are significantly associated with the profitability of Turkish deposit banks. The changes in the net total loans/assets, loan loss provisions/loans, and loan loss provisions/assets variables have insignificant impacts on the profitability.

Keywords: dollarisation; profitability; deposit banks; panel data; Turkey.

DOI: 10.1504/AAJFA.2025.149795

Afro-Asian Journal of Finance and Accounting, 2025 Vol.15 No.6, pp.758 - 774

Received: 10 Oct 2022
Accepted: 29 Dec 2023
Published online: 13 Nov 2025 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article