Özet:

Banks are systematically important instutions in Turkey and form 83% of the financial sector. Banking as a sector plays an important role in shaping the economic structure of the country, expanding the markets and forming policies regarding financial markets. The most important function of banks is acting as intermediarries and the their basic operation is crediting. As crediting is simply financing of consumption and production, it directly affects macroeconmy and gets affected by it. Credit risk simply means a fail of repayment on a loan. Sectoral credit concentration is one of the factors that increase credit risk. Sectoral credit concentration, in other words, credit portfolio preference is not important for only banks’ risk and return. It is also important for banking sector stability along with macroeconomic stability as well. In this perspective, it is thought that banking sector must be considered as a whole, so Sectoral credit concentration and credit risk-return relationship in the Turkish banking sector is analyzed by Auto-Regressive Distributed Lag model with the quarterly banking sectoral data and macroeconomical variables between 2007 - 2018. According to the findings, there is a negative relationship between sectoral concentration and credit risk, positive relationship between sectoral concentration and ROE. Therefore sectoral concentration brings specialization in some sectors and lowers the credit risk in Turkish banking sector and increase profitability by lowering costs regarding credit monitoring and control. When all the findings are taken into account from the two models, despite some studies in the literature, there were no tradeoff observed between lower credit risk and profitability in Turkish banking sector.

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