Co-Movement of Profitability and Bank Concentration in Turkey: a Wavelet Coherence Approach

ABSTRACT

There has been an increased focus among recent studies on bank profitability. However, there is a gap in the literature in terms of the relationship and causalities between profitability and bank concentrations. To close this gap, this study investigates whether the concentrations of 5 and 7 banks have an impact on bank profitability by using the wavelet coherence technique covering the period 1995Q1-2017Q3. As expected, it is observed that bank profitability and banking concentrations of 5 and 7 banks significantly fluctuated in the period 2000 and 2003. In Turkey, bank concentrations significantly cause the banks’ profitability at different time periods.