Sectoral Non-Performing Loans Cycle in Turkey: An Empirical Analysis

Abstract

This study examines how much of the total loans are in follow-up and which sectors have difficulties repaying these loans, using the monthly data from the post-2000 period using the Event Study method. Undoubtedly, banks’ loans to the sectors are the most basic investment element. It is a significant problem on which sectors these loans are concentrated on and the contribution of these sectors to the country's economy, and their effects on the economy. Another critical problem is the recycling problem in the payment of loans extended by banks. This situation, called non-performing loans in short, is of great importance in terms of being the leading indicator of crises. The research findings showed significant increases in almost all selected sectors in the pre-crisis, crisis, and post-crisis periods. From this point of view, the rate of growth in non-performing loans of banks provides some predictions about the general course of the economy.