Bank size, competition and risk in the Turkish banking industry

Kasman A., KASMAN S.

EMPIRICA, cilt.43, sa.3, ss.607-631, 2016 (SSCI) identifier identifier

  • Yayın Türü: Makale / Tam Makale
  • Cilt numarası: 43 Sayı: 3
  • Basım Tarihi: 2016
  • Doi Numarası: 10.1007/s10663-015-9307-1
  • Dergi Adı: EMPIRICA
  • Derginin Tarandığı İndeksler: Social Sciences Citation Index (SSCI), Scopus
  • Sayfa Sayıları: ss.607-631
  • Anahtar Kelimeler: Bank earnings volatility, Size, Boone index, Turkish banking, EARNINGS VOLATILITY, PANEL-DATA, DIVERSIFICATION, IMPACT, TOO
  • Dokuz Eylül Üniversitesi Adresli: Evet

Özet

This paper investigates the impact of bank size and competition on earnings volatility and insolvency risk using quarterly data for commercial banks operating in the Turkish banking industry for the period 2002Q1-2012Q2. The main result of the paper indicates that bank size and earnings volatility are negatively related, suggesting that larger banks are less risky. The results also indicate that competition measured by the Boone indicator increases earnings volatility. The results further suggest that higher capitalized banks, banks with a higher share of non-interest income in total income and efficient banks face lower earnings volatility. Finally, insolvency risk measured by Z-score and bank size are positively related, suggesting that larger banks are more stable.