Abstract:

The aim of this study is to investigate whether capital adequacy ratios in Turkey have an impact on banks' profitability. At the same time the impact of capital adequacy on banks' profitability will be compared to conventional -interest free banks. For this purpose, according to asset size in Turkey with the biggest 10 banks (7 private and 3 public bank) and 3 interest free banks operating in the banking sector capital adequacy and profitability are compared using quarterly data of 2011 to 2016.Panel data analysis was used as a method in the application part of the study. The data were taken from the official websites of The Bank Association of Turkey and Participation Banks Association of Turkey. As a result of the study, it was concluded that the capital adequacy of the banks had an impact on the profitability of the banks. However, capital adequacy did not differ between participation and conventional banks. In other words, when the effect of capital adequacy on the profitability of the banks is examined, the participation banks and the conventional banks did not show any significant difference. The Capital Adequacy Ratio is mostly affected by Albaraka Türk Participation Bank, the least by Halk Bank.

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