Analysis of factors influencing banks' profitability using panel data models

The banking sector, as one of the fundamental pillars of the financial industry, being in a healthy condition is of paramount importance not only from an individual perspective but also for firms and governmental administrations. Banks support sustainable economic conditions in all economies by facilitating investments and channeling idle funds into the economy. In this study, the analysis of micro and macro-level variables affecting the return on assets and return on equity of 24 banks operating in the Turkish banking sector from 2016 to 2023 has been investigated using panel data models. According to the results obtained from the analysis, it was found that there is a positive and significant relationship between return on assets and capital adequacy ratio, a negative and significant relationship with non-performing loans, a positive and significant relationship with BIST100 (Borsa Istanbul 100 Index), and a negative and significant relationship with bond yields. Additionally, a negative and significant relationship was found between return on equity and non-performing loans, and a positive and significant relationship with the BIST100 index.