An Analysis to Identify the Factors Affecting Liquidity Risk in Domestic and Foreign Deposit Banks Operating in the Turkish Banking Sector: 2012-2022 Period

The banking sector is the financial institution in charge of allocating liquidity to the most profitable investments. A bank's liquid assets are essential not only to secure the bank against unforeseen difficulties but also to increase efficiency. By their very nature, banking activities expose banks to numerous financial risks. Liquidity risk, which has a significant impact on the banking system, attracts the attention of policymakers, researchers and practitioners as it can quickly lead to systemic contagion and instability in the financial system. Therefore, the aim of this study is to identify the factors affecting the liquidity risk of deposit banks operating in the Turkish banking sector through linear multiple regression analysis utilizing data for the period 2012-2022. Both macroeconomic and bank-specific variables of 27 domestic and foreign capital deposit banks are included in the analysis. Model 1 was developed to identify the factors affecting the level of liquidity risk in domestic capital banks and model 2 was developed to identify the factors affecting the level of liquidity risk in foreign capital banks and both models were identified to be strong and highly efficient. As a result, the factors affecting the liquidity risk in domestic banks are AQ, Bsize, NPL, GDP and NIM according to the level of importance.  The factors affecting the liquidity risk in foreign capital banks are determined as AQ, Bsize, CAR, NPL, GDP and NIM according to their importance levels.