The Determinants of The Non-Performing Loans: The Case of Turkish Banking Sector

The objective of this study is to investigate the determinants of non-performing loans (NPLs) in the Turkish banking sector during the 2010-2019 period. The pooled OLS (POLS), the fixed effects (FE) and the system GMM (SGMM) were used for the analyses. Empi - rical results show that capital adequacy ratio and GDP growth rate have a statistically sig - nificant negative effect on the NPLs ratio. The operating efficiency, the income diversificati - on, the first lagged NPLs ratio and the infla - tion are positively associated with the NPLs ratio. The negative relation between the ca - pital adequacy ratio and the nonperforming loans ratio supports the moral hazard hypot - hesis. The positive relation between the other operating expenses to total assets ratio and nonperforming loans ratio supports the bad management hypothesis