THE EFFECT OF THE FINANCIAL STRUCTURE OF BANKS ON PROFITABILITY: AN ANALYSIS ON THE PRIVATELY-OWNED DEPOSIT BANKS

This paper analyzes the relation between financial structure and profitability of privately-owned banks that operate in the Banking Sector in Turkey. The relation between the financial structure and the profitability indicators that are obtained from the financial reports for the period of 2011-2017 of 8 privately-owned banks that are registered at The Banks Association of Turkey is tested by using panel data analysis. For the analysis, while return on assets and net interest margin are used as dependent variables, total credit ratio, capital ratio, size of deposits and size of banks are used as independent variables. The results that are found from the analysis are that total deposits/total assets and capital ratio have a positive effect on return on assets and net interest margin; that while total deposits/total assets ratio has no effect on return on assets, it has a negative effect on net interest margin; that while size of assets has a positive effect on return on assets, it has a negative effect on net interest margin