The Impact of Foreign Capital on Efficiency and Productivity of the Turkish Banking Sector
Dr. Senol BABUSCU, Dr. Adalet HAZAR

The ultimate objective of this academic venture is to investigate empirically the impact of cross-frontier new owners, representing the foreign capital as a consequence of a change in the shareholder structure, on the efficiency and productivity of the local banking industry over a period encompassing 2002-2011. Divided into two fiscal periods of 2002-2005 and 2006-2011 for technical measurement purposes, the discriminant analysis performed on the financial data pertaining to 10 banks exposed to foreign capital since 2005 revealed that they were significantly discriminated between the two disparate periods covered. In the subsequent stage of the analysis, productivity indicators were adopted as the dependent variable and the financial ratios as the independent variable, thereby enabling us to construct the methodological infrastructure for conducting a comprehensive “multivariate multiple regression” analysis, taking into account the dates of foreign capital injection. After accounting for the control variables, findings coerced us to infer the conclusion that a significant and positive transformation has occurred in fundamental performance benchmarks associated with scores relating to employees per branch and deposit-base per branch. In the concluding phase of the research, the “multivariate multiple regression” testing was implemented once again for a comparison between 10 banks accommodating foreign capital investment and the remaining nine banks with constant equity-ownership structure during the 2006-2011 era, as we discovered that particularly the large banks with non-resident equity participation demonstrated substantially plausible performance and achieved tangible efficiency and productivity gains relative to the small entities.

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