Author(s): Yüksel AYDIN
In this study, it is aimed to analyze the relationship between the profitability and capital adequacy ratio of 23 deposit banks operating in Turkish banking sector for the period of 2012-2017. In the study, the ratio of return on assets of deposit banks is used as an indicator of profitability. The findings of the study using the panel data regression analysis indicate that there is an inverted U-shaped relationship between capital adequacy ratio and the ratio of return on assets of the bank. More specifically, the increase in capital adequacy ratio up to a certain point positively affects the return on assets, but the increase in the capital adequacy ratio after this point leads to a decrease in the profitability variable. Thus, the findings of study have great importance for the banking sector and Turkish economy.
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