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Original Article

Ekonomik Yaklasim. 2007; 18(62): 33-59


AN ALTERNATIVE RISK RANKING MODEL FOR TURKISH BANKING SYSTEM

Murat ATAN.

Abstract
The process of globalization and international economic and financial crises significantly influence developing countries such as Turkey and, specifically the banking sector constituting the largest part of the financial sector in these countries. There is no doubt that this fact stems from present structural problems of banking sector as well as several economic reasons. The developments in international financial markets reveal that a structural reform in the Turkish banking system is necessary as in other developing countries. Considering the globalization in financial markets, the determination of Turkey to join the European Union (EU), and recent arrangements offered by institutions such as lnternational Payments Bank, it is necessary that risk management techniques are adopted and practiced widely by the banks in Turkish banking sector which will inevitably integrate with international markets in the long run. In the present day, the main reasons for banks to focus on risk management are great changes in geographıic conditions at working places and in product variety; a high degree of competition inside and outside the sector; the increasing complexity of the institution and activities: the rapid development of technology; and the lack of educated and well-endowed staff. One of the best solutions proposed by modern theory of management is risk management. Risk management approach relates yield, capital and risk, finds an optimum equilibrium among these variables. An alternative risk determination model for the risks in Turkish banking sector was developed, applying the factor analysis in bank groups in the Turkish banking sector each period for December 2002-September 2006. Factor scores, which are weighted with eigenvalue, have constituted for each period and banking group and all banks are ranked by these scores. According to these ranking results, Privately-owned deposit banks witlh Development and investment banks have been condensation top of the rows in ranking.

Key words: Risk Management, Banking, Multivariate Statistical Analysis, Factor Analysis, Risk Ranking, Performance Evaluation



Article Language: Turkish English



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