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Performance Analysis of the Turkish Islamic Banking Sector

Authors: Bánkuti Gyöngyi; József Varga; Nagy Tímea Gyöngyi;

Performance Analysis of the Turkish Islamic Banking Sector

Abstract

Regularly examining and assessing banks is essential to maintaining the stability of a country's, region's, or special economy's financial systems. This study examines Islamic banks in Turkey. Turkey plays a significant role in the economic stability of its region, and a strong banking system is crucial for financial stability. Based on data from the Bank Association of Turkey's online database (Türkiye Bankalar Birliği, 2021), a CAMEL-type analysis was conducted that considers financial stability, operational efficiency, and credibility. The CAMEL technique not only ranks the participating banks, but also provides recommendations. The results suggest that Turkish banks should review their expenses and develop more efficient operational strategies. They should also monitor and reduce their cost-to-asset ratios to improve business performance. Turkish banks are encouraged to study successful banks to improve their efficiency and profitability. Improving cost efficiency and using assets more efficiently are also key to improving banks’ profits. Furthermore, it was concluded that Islamic Turkish banks could benefit from reducing their loan-to-deposit ratios and increasing their liquid asset ratios. This would reduce liquidity risk and facilitate lending activity. In conclusion, Islamic Turkish banks should work to reduce their loan-to-deposit ratio and increase their liquid asset ratio. This would reduce liquidity risk and facilitate lending.

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
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Average
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