The Financial Performance of the Commercial Banks In Crisis Period: Evidence From Turkey As an Emerging Market

Abstract

Emerging markets have been heavily affected by the global crisis due to integration with the global economy through trade and capital flows. For this reason, the findings in this paper are of great help and interest to international investors considering that Turkey is one of the major emerging markets in Europe with a linkage with international markets. The objective of this study is to identify the impacts of the financial crisis in the performances of the Turkish commercial banks by their ownership structures (private or public) over the years between 2005 and 2009 by using Grey Relation Analysis (GRA) method and to determine the financial ratios in their financial performances. The paper considers a five-year period encompassing the year of the crisis as well as two years before and after the financial turmoil. The banks, by their capital structures, are ranked based on their performances by use of the GRA method observing 14 financial ratios with respect to profitability, liquidity, active quality and capital sufficiency. Based on the findings in the paper, the performance ranking has been transformed from foreign-public-private banks before the crisis (2005-2006) to private-foreign-public banks during the crisis (2008-2009).

Keywords: Financial Crisis, Turkish Banking Sector, Capital Structure, Financial Performance, Financial Ratios, Grey Relation Analysis