Determinants of Financial Performance of Non-Bank Financial Institutions: Factoring Institutions in Türkiye

Purpose: Non-bank financial institutions can contribute to the deepening and diversification of financial markets by providing broader access to credit, insurance, and investment services. Additionally, they may support financial stability by offering alternative sources of financing to the traditional banking system. Therefore, examining the role of NBFIs and identifying the determinants of their financial performance can offer valuable insights into the finance literature. This study analyzes the factors influencing the financial performance of factoring companies. Methodology: The Autoregressive Distributed Lag (ARDL) bounds testing approach is employed. The independent variables include banking sector profitability (ROA & ROE), the Turkish lira reference interest rate, and inflation. The dependent variable is the profitability of the factoring sector. Findings: Empirical results indicate no statistically significant relationship between banking sector profitability and the financial performance of factoring firms. However, inflation exerts a negative impact on the sector’s profitability. Originality: While the literature has addressed the importance of factoring in financial markets, empirical studies focusing on Türkiye are limited. This research provides country-specific insights into the determinants of factoring firms' performance.