• Fatih Macit Department of Economics, Suleyman Sah University
Keywords: Non-performing Loans, Turkish Banking Sector


In this paper I investigate the determinants of non-performing loans (NPLs) ratio for commercial banks in Turkey by incorporating bank specific and macroeconomic variables. I find that banks with a higher equity to totalassets ratio and a higher net interest margin are expected to have a higher NPLs ratio whereas an increase in net loans to total assets ratio is expected to reduce the NPLs. The results also reveal that public banks and foreignbanks are expected to have a higher NPLs ratio. In terms of macroeconomic variables GDP growth shows its effect on NPLs with a lag and a domestic currency depreciation is expected to deteriorate the loan portfolios of commercial banks


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