Determinants of Non-Performing Loans in Turkish Deposit Banks

Abstract

The main purpose of this research is to reveal the determinants of non-performing loans (NPLs) of Turkish deposit banks on banking operations. The study aims to evaluate the determinants of non-performing loans in terms of both bank-level data and macroeconomic indicators between 2012 and 2023 by using the method of panel regression analysis for 20 deposit banks. Random model is valid for NPLs by applying Hausmen test. The results of the empirical analysis suggest that the non-performing loans (NPLs) is determined by a series of factors. These factors are listed as bank size, profitability, lending activity and credit quality. Analysis results indicate that the effect of bank size (BS), return on assets (ROA), lending level (LTA) and credit quality (PLLTA) on NPLs are statistically significant.