A Research on the Performance of the Profitability Values of Participation Banks in Turkey with the Income of the People

Abstract

Purpose – In this research, the relationship between the profitability and financial performance of participation banks in Turkey with household income groups has been examined. Design/methodology/approach – In the research, return on assets (ROA), liquidity/asset ratio (LR) and asset/capital ratio (CA) variables compiled for Turkey by Turkstat household income groups and Islamic Financial Services Board (IFSB) were used. Consumer Confidence Index (TGI) and Consumer Price Index (TUFE) data are the control data of the research. Data between 2013 and 2018 were used in the research. Results – According to the results of the research, an increase was observed in the income levels of all income groups within the examined time period. However, over time, it was observed that the income distribution gap between the groups also increased. According to the results of correlation analysis, statistically significant and negative (p<0.01) between CA and year; A statistically significant and positive correlation was found with TGI (p<0.01). Statistically significant and positive (p<0.05) between DLR and year; A statistically significant and negative correlation was found with TGI (p<0.01). A statistically significant and positive correlation was found between ROA and TUFE (p<0.05). According to the logit model results; It was found that the year has a negative and significant contribution to the asset/capital ratios of participation banks, in other words, asset/capital values have decreased over time. However, although household income group has a significant effect in univariate analysis, its effect is not significant in multivariate analysis (p>0.05). Discussion – The results show that participation banks in Turkey can generate more robust and long-term permanent income in lower income groups.