The Impacts of Dollarization on the Profitability of Turkish State-owned Deposit Banks

This study explores the association between dollarization and profitability in state-owned deposit banks, which play a significant role in the financial system in Turkiye. Quarterly data from Halkbank, Vak & iota;fbank and Ziraat Bank spanning from 2005 to 2021 are used in the research. Three dollarization-related variables -deposit dollarization, balance sheet currency mismatch and foreign currency derivatives -are included jointly in a study for the first time in the literature. Although the directions differ between banks in the short-and long-run, the estimation coefficients obtained by applying Panel ARDL techniques imply that all dollarization-related variables have statistically significant impacts on the profitability of Turkish state-owned deposit banks.