THE IMPACT OF FINANCIAL CRISES ON THE COMMERCIAL BANK NET INTEREST MARGINS: EVIDENCE FROM THE TURKISH BANKING INDUSTRY

Abstract

This paper investigates the impact of financial crisis on the determinants of bank interest rate margin (NIM) in Turkey over the period 1995-2018. Turkey witnessed two recent major economic crises a local crisis in 2001 and the global crisis in 2008. The sample period is divided into three sub-periods: pre-crisis period (1995-2001) post-local crisis period (2002-2007) and post-global crisis period (2008-2018). The NIMs are specified as a function of bank and market-specific variables such as operating cost liquidity credit risk implicit interest payments size managerial efficiency and concentration. The results of the analysis show that determinants of NIMs following the local crisis and global crisis are significantly changed. After the local crisis credit risk levels were considered more crucial and costs and efficiency is considered as the focus in the aftermath of the global financial crisis.