PERFORMANCE COMPARISON OF PARTICIPATION BANKS AND DEPOSIT BANKS: THE IMPACT OF HIGH DEPOSIT RATES ON PROFITABILITY, LIQUIDITY AND NON-PERFORMING LOANS

Authors : Sabri Burak Arzova, Bertaç Şakir Şahin

Pages : 335-350

Doi:10.14783/maruoneri.1660777

View : 82 | Download : 224

Publication Date : 2025-07-27

Article Type : Research Paper

Abstract :Participation banks and deposit banks operate under fundamentally distinct philosophies. However, the financial literature analyzes whether the different philosophies of participation banks and conventional banks are reflected in practice. Additionally, the hypothesis that participation banks can be an alternative to conventional banking and perform differently during financial crises, high interest rates, epidemics and political crises is also investigated. This research compares the effectiveness of participation banks and deposit banks in Turkey regarding liquidity, non-performing loans, and profitability. For this purpose, T-Test is implemented to the data collected for the period 01.2008-08.2024. In addition, T-Test is performed by limiting the analysis period for the period 05.2020-08.2024, when deposit interest rates increased. Empirical findings show that participation banks have higher liquidity ratios and stronger return on equity ratios than deposit banks during 05.2020-08.2024. However, during periods of high deposit rates, deposit banks tend to have higher ratios of non-performing loans. The average ROA of the two types of banks does not show a statistically significant difference.
Keywords : Finansal Piyasalar ve Kurumlar, Katılım Bankaları, Mevduat Bankaları.

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