ABSTRACT
The aim of this study is to analyze the impact of the new economic model implemented in Türkiye during the second half of 2021 on the banking sector’s profitability in 2022 and to provide a forward-looking analysis. The model introduced at the end of 2021 is based on the belief that “interest rates are the cause, and inflation is the result” of economic problems. In line with this philosophy, the Central Bank significantly lowered interest rates despite falling behind the inflation rate. This caused deterioration in the macroeconomic indicators of the country. The measures introduced to support the model primarily targeted the banking sector, making it the most-affected industry. While certain initiatives within this framework positively influenced the profitability of banks in 2022, their return on equity still trailed behind the inflation rate. Assessing the sector’s overall condition in 2023, it is possible that the previously observed high profits may decline or experience limited growth due to unfavorable developments affecting specific favorable factors from 2022. Consequently, the risks associated with banks’ balance sheets have increased in both the medium and long terms.
