The dynamic relationship between earnings volatility, concentration, stability and size in the Turkish banking sector

Kasman A., Kirbas-Kasman S.

APPLIED ECONOMICS LETTERS, vol.20, no.12, pp.1187-1192, 2013 (SSCI) identifier

  • Publication Type: Article / Article
  • Volume: 20 Issue: 12
  • Publication Date: 2013
  • Doi Number: 10.1080/13504851.2013.799742
  • Journal Name: APPLIED ECONOMICS LETTERS
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.1187-1192
  • Keywords: earnings volatility, concentration, stability, bank size, Turkish banking, G21, G32, PANEL-DATA, COMPETITION, MODELS
  • Dokuz Eylül University Affiliated: Yes

Abstract

This article investigates the causal relationship between earnings volatility, concentration, stability and bank size in the Turkish banking sector in the period 2002 to 2011. A relatively new empirical methodology, dynamic panel Granger-causality test, is used to analyse the causal relationship between these variables. The empirical result shows that bank size and concentration negatively Granger-cause earnings volatility, suggesting that larger banks and more concentrated banking market decrease earnings volatility. Moreover, the result also indicates that concentration in the banking sector increases bank stability and supports the concentration-stability' hypothesis.