Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey
This study examines the impact of sectoral concentration on credit default risk, drawing from economic theory and portfolio management principles, utilizing the Turkish aggregated sector-level data and banking data from 2009 to 2022. The study employs a panel data analysis framework to investigate t...
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Mehmet Akif Ersoy University
2024-12-01
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| Series: | Mehmet Akif Ersoy Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi |
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| Online Access: | https://dergipark.org.tr/en/download/article-file/3843091 |
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| author | Elif Acar Arzu Şahin |
| author_facet | Elif Acar Arzu Şahin |
| author_sort | Elif Acar |
| collection | DOAJ |
| description | This study examines the impact of sectoral concentration on credit default risk, drawing from economic theory and portfolio management principles, utilizing the Turkish aggregated sector-level data and banking data from 2009 to 2022. The study employs a panel data analysis framework to investigate the relationship between sectoral diversification in loans and credit risk, controlling for sector-specific variables. Unlike previous studies primarily reliant on banking system data, this research broadens the scope by incorporating the real sector credit usage data for the measurement of concentration. Additionally, instead of the commonly used Herfindahl-Hirschman Index, the study employs the Sector Concentration Index as a measure of concentration, allowing for a comparison of sector distribution with an ideal market sector distribution. The analysis considers not only the widely used indicator of credit risk, non-performing loans ratio in the banking system but also bad debt ratios in the real sector, thereby enhancing the understanding of credit risk dynamics. The analysis results, which show a significant positive relationship between sectoral concentration indices and non-performing ratios employed, reveal that sectoral credit concentration has an increasing effect on the credit risk level and offers insights into the optimal diversification strategies for mitigating credit risk in the banking sector. |
| format | Article |
| id | doaj-art-9179c7b49bd1475a853aa624f3eeb411 |
| institution | Kabale University |
| issn | 2149-1658 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | Mehmet Akif Ersoy University |
| record_format | Article |
| series | Mehmet Akif Ersoy Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi |
| spelling | doaj-art-9179c7b49bd1475a853aa624f3eeb4112025-01-27T12:39:37ZengMehmet Akif Ersoy UniversityMehmet Akif Ersoy Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi2149-16582024-12-011141392141010.30798/makuiibf.1464022273Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in TurkeyElif Acar0https://orcid.org/0000-0003-0107-5517Arzu Şahin1https://orcid.org/0000-0002-9944-1791ADANA ALPARSLAN TÜRKEŞ BİLİM VE TEKNOLOJİ ÜNİVERSİTESİAdana Alparslan Türkeş Bilim ve Teknoloji ÜniversitesiThis study examines the impact of sectoral concentration on credit default risk, drawing from economic theory and portfolio management principles, utilizing the Turkish aggregated sector-level data and banking data from 2009 to 2022. The study employs a panel data analysis framework to investigate the relationship between sectoral diversification in loans and credit risk, controlling for sector-specific variables. Unlike previous studies primarily reliant on banking system data, this research broadens the scope by incorporating the real sector credit usage data for the measurement of concentration. Additionally, instead of the commonly used Herfindahl-Hirschman Index, the study employs the Sector Concentration Index as a measure of concentration, allowing for a comparison of sector distribution with an ideal market sector distribution. The analysis considers not only the widely used indicator of credit risk, non-performing loans ratio in the banking system but also bad debt ratios in the real sector, thereby enhancing the understanding of credit risk dynamics. The analysis results, which show a significant positive relationship between sectoral concentration indices and non-performing ratios employed, reveal that sectoral credit concentration has an increasing effect on the credit risk level and offers insights into the optimal diversification strategies for mitigating credit risk in the banking sector.https://dergipark.org.tr/en/download/article-file/3843091sectoral loan concentrationsectoral loan diversificationcredit default riskturkish company accountsturkish banking sectorpanel data analysissectoral loan concentrationsectoral loan diversificationcredit default riskturkish company accountsturkish banking sectorpanel data analysis |
| spellingShingle | Elif Acar Arzu Şahin Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey Mehmet Akif Ersoy Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi sectoral loan concentration sectoral loan diversification credit default risk turkish company accounts turkish banking sector panel data analysis sectoral loan concentration sectoral loan diversification credit default risk turkish company accounts turkish banking sector panel data analysis |
| title | Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey |
| title_full | Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey |
| title_fullStr | Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey |
| title_full_unstemmed | Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey |
| title_short | Sectoral Concentration in Loans and Credit Risk: An Examination by Company Accounts in Turkey |
| title_sort | sectoral concentration in loans and credit risk an examination by company accounts in turkey |
| topic | sectoral loan concentration sectoral loan diversification credit default risk turkish company accounts turkish banking sector panel data analysis sectoral loan concentration sectoral loan diversification credit default risk turkish company accounts turkish banking sector panel data analysis |
| url | https://dergipark.org.tr/en/download/article-file/3843091 |
| work_keys_str_mv | AT elifacar sectoralconcentrationinloansandcreditriskanexaminationbycompanyaccountsinturkey AT arzusahin sectoralconcentrationinloansandcreditriskanexaminationbycompanyaccountsinturkey |