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A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector

This paper aims to determine the factors affecting cost and profit efficiency of commercial banks in Turkey and to examine the ownership effect on cost and profit efficiency in an emerging market. Another aim of the study is to carry out the most recent and longitudinal (2006-2020) analysis of effi...

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Main Author: Diko, Abdulhakim
Format: Article
Language:English
Published: UUM Press 2024
Subjects:
HG Finance
Online Access:https://repo.uum.edu.my/id/eprint/30366/1/IJBF%2019%2001%202024%201-38.pdf
https://doi.org/10.32890/ijbf2024.19.1.1
https://repo.uum.edu.my/id/eprint/30366/
https://e-journal.uum.edu.my/index.php/ijbf/article/view/17468
https://doi.org/10.32890/ijbf2024.19.1.1
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spelling my.uum.repo.303662024-02-05T08:21:36Z https://repo.uum.edu.my/id/eprint/30366/ A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector Diko, Abdulhakim HG Finance This paper aims to determine the factors affecting cost and profit efficiency of commercial banks in Turkey and to examine the ownership effect on cost and profit efficiency in an emerging market. Another aim of the study is to carry out the most recent and longitudinal (2006-2020) analysis of efficiency in the Turkish banking industry. This study uses an intermediation approach with data envelopment analysis (DEA) as its methodology. A total of 23 commercial banks were selected as the study sample and their quarterly data from 2006- 2020 was collected. In addition, an external two-stage DEA model with Tobit regression was applied to examine the determinants of cost and profit efficiency. The results show that Turkish banks currently work with relatively higher cost efficiency than profit efficiency. On the other hand, foreign banks display a lower cost and profit efficiency performance. The downward trend in profit efficiency in the Turkish banking system sends a warning signal on the health and stability of the banking sector. Multivariate Tobit regression analysis reveals how Total Assets, Deposit Share, Asset Growth, Time Deposits, NPL, and Ownership Structure significantly affect cost and profit efficiency. Ratio of liquid assets to total assets is positively correlated with the efficiency values, in contrast to results from previous studies. Previous studies have mostly been limited to scale and technical efficiency and focused on the cost efficiency of Turkish banks. In this study, the gap in the literature is filled by a comparative examination of the cost and profit efficiency at the scale of bank ownership. The study will look at and discussed these issues at the most stable period and the pre-pandemic period in the Turkish economy. UUM Press 2024 Article PeerReviewed application/pdf en cc4_by https://repo.uum.edu.my/id/eprint/30366/1/IJBF%2019%2001%202024%201-38.pdf Diko, Abdulhakim (2024) A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector. International Journal of Banking and Finance (IJBF), 19 (1). pp. 1-38. ISSN 2811-3799 https://e-journal.uum.edu.my/index.php/ijbf/article/view/17468 https://doi.org/10.32890/ijbf2024.19.1.1 https://doi.org/10.32890/ijbf2024.19.1.1
institution Universiti Utara Malaysia
building UUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Utara Malaysia
content_source UUM Institutional Repository
url_provider http://repo.uum.edu.my/
language English
topic HG Finance
spellingShingle HG Finance
Diko, Abdulhakim
A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector
description This paper aims to determine the factors affecting cost and profit efficiency of commercial banks in Turkey and to examine the ownership effect on cost and profit efficiency in an emerging market. Another aim of the study is to carry out the most recent and longitudinal (2006-2020) analysis of efficiency in the Turkish banking industry. This study uses an intermediation approach with data envelopment analysis (DEA) as its methodology. A total of 23 commercial banks were selected as the study sample and their quarterly data from 2006- 2020 was collected. In addition, an external two-stage DEA model with Tobit regression was applied to examine the determinants of cost and profit efficiency. The results show that Turkish banks currently work with relatively higher cost efficiency than profit efficiency. On the other hand, foreign banks display a lower cost and profit efficiency performance. The downward trend in profit efficiency in the Turkish banking system sends a warning signal on the health and stability of the banking sector. Multivariate Tobit regression analysis reveals how Total Assets, Deposit Share, Asset Growth, Time Deposits, NPL, and Ownership Structure significantly affect cost and profit efficiency. Ratio of liquid assets to total assets is positively correlated with the efficiency values, in contrast to results from previous studies. Previous studies have mostly been limited to scale and technical efficiency and focused on the cost efficiency of Turkish banks. In this study, the gap in the literature is filled by a comparative examination of the cost and profit efficiency at the scale of bank ownership. The study will look at and discussed these issues at the most stable period and the pre-pandemic period in the Turkish economy.
format Article
author Diko, Abdulhakim
author_facet Diko, Abdulhakim
author_sort Diko, Abdulhakim
title A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector
title_short A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector
title_full A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector
title_fullStr A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector
title_full_unstemmed A Dea and Tobit Analysis of the Determinants of Cost and Profit Efficiency in the Turkish Banking Sector
title_sort dea and tobit analysis of the determinants of cost and profit efficiency in the turkish banking sector
publisher UUM Press
publishDate 2024
url https://repo.uum.edu.my/id/eprint/30366/1/IJBF%2019%2001%202024%201-38.pdf
https://doi.org/10.32890/ijbf2024.19.1.1
https://repo.uum.edu.my/id/eprint/30366/
https://e-journal.uum.edu.my/index.php/ijbf/article/view/17468
https://doi.org/10.32890/ijbf2024.19.1.1
_version_ 1792158585624461312
score 13.211869

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