Determinants of the credit risk in developing countries after economic crisis: A case of Turkish banking sector

Abstract

The aim of this study is to define the determinants of the credit risk of the banks in developing countries after economic crisis. Within this scope, the banking sector of Turkey was tried to analyze. In this study, 23 deposit banks of Turkey were analyzed. Furthermore, annual data of 24 Turkish deposit banks for the period between 2004 and 2014 was tested by probit model. Related data were provided from the Banks Association of Turkey, OECD and World Bank. With respect to credit risk, non-performing loans ratio was used as a dependent variable. On the other hand, nine explanatory variables were included in the model so as to define the determinants of non-performing loans. As a result, it was determined that decrease in industry production index is the most important determinant of the increase in non-performing loans in Turkey.