Investigation of the Effects of Basel Capital Adequacy Ratio Change on the Turkish Banking Sector: Comparative Conventional and Islamic Banking with Ratio Analysis

Abstract

In the study, in order to determine the effect of the capital adequacy ratio on the items such as the profitability and interest-share incomes of the Islamic banks and the traditional banks, the datas of Turkish banking sector are examined with ratio analysis method. Accordingly, the capital adequacy ratio of both bank groups tends to decrease in the period examined. In both groups, credit and assets, which are one of the factors causing the decrease in capital adequacy, increased during the period and there was an increase in interest (profit share) revenues in the same way. However, at this point, Islamic banks performed better and the increase in interest (profit share) incomes was higher than that of the more traditional banks, even though the capital adequacy ratio in Islamic banks decreased less. Nevertheless, while the credit figures increased in the face of the decrease in the capital adequacy ratio, the return on equity of the banks did not increase and there was no leverage effect on the profitability figures of the decrease in the capital adequacy ratio at this point.