Preliminary communication
https://doi.org/10.18045/zbefri.2019.1.303
Profitability effects of financial globalization in an emerging market banking industry: insights into Turkey
Ece C. Akdoğan
; Associate Professor, Çankaya University, Department of Banking and Finance, Mimar Sinan Cd. 4, 06790 Ankara, Turkey
Ekin Ayşe Özşuca
orcid.org/0000-0002-5615-3028
; Assistant Professor, Çankaya University, Department of International Trade, Mimar Sinan Cd. 4, 06790 Ankara, Turkey
Abstract
The massive financial liberalization followed by accelerating financial
globalization leaded to significant structural changes in the financial sector. Since financial institutions play a dominant role in functioning of financial sector, especially in emerging markets where banking industries are generally among the most sensitive sectors to increased interconnectedness of financial markets, how
financial globalization actually affects the efficiency of financial intermediation is a vital question. However, although there exists plenty of research focusing on financial integration, impacts of financial globalization is untouched. Hence, this
study investigates the bank profitability effects of financial globalization through focusing on an emerging market, Turkey and searches for any potential differences that may prevail among banks with different ownership structures. The findings
indicate that while the market based profitability measures improve with financial globalization, the accounting based measures deteriorate pinpointing to an over optimism in the market which in turn brings in mispricing problems. Besides, ownership structure is found to affect the market based measures where banks with
domestic and private ownerships are found to benefit more. However, since no significant distinction could be detected among any of the ownership compositions for accounting based profitability measures, such misappraisals seem to foster the optimism in the market.
Keywords
financial globalization; banking industry; market and accounting based profitability; ownership structure; emerging markets
Hrčak ID:
221689
URI
Publication date:
28.6.2019.
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