Banks Attributes and Financial Performance of Non-Interest Banks in Turkey

Adem Arslan

Abstract


Non-interest banks have gotten a lot of publicity in recent years owing to their distinctive business model of not charging interest on the loans they provide customers. Consequently, opponents of this business model have questioned the ability of these financial institutions to sustain their performance over time. This study analyzes some of the attributes and their effects on the performance of the non-interest banks in Turkey. The population of the study comprises of Seven (7) banks out of which only three (3) have adequate data set for the period 2008 to 2017. To analyze the collected data, the regression analysis is employed. The results of the analysis show that the attributes jointly have significant effect on the performance of non-interest banks. At individual level, number of products is shown to have a significant positive effect while the age of the firms has a significant negative effect on the performance of the banks. Conversely, capital ratio has positive non-significant effect on the performance. Furthermore, firm size has a negative non-significant effect on the performance of the banks. Based on the findings of the study, it is recommended that, to improve their performance, the non-interest banks should focus on product innovation. However, the banks should be wary of the potential loss of control that may arise from their growth in size and age.


Keywords


Non-interest banks; performance; Turkey

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DOI: http://dx.doi.org/10.20321/nilejbe.v4i8.152

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