The Relation Between Bond Returns, Bist-100 Returns and Bank Profitability

The purpose of this study is to analyze the impact of bond return index (proxy for market interest rate) as well as BIST-100 (proxy for economic activity) upon bank profitability. The scope of this paper is Turkey. Data covers quarterly period between 2011 and 2021, data structure is panel data. Panel Dynamic Ordinary Least Squares (DOLS) is used in econometric analysis conducted in this study. ROA ratio of commercial bank, participation banks (non-interest banking industry) and investment & development banks are used as dependent variable; on the other hand, all-bond return index (as a reference for bond market interest rates) and BIST-100 return index are used as explanatory variables. Finding of the analysis indicate that the bond yield index (BOND) and the stock return index (BIST100) have a positive and statistically significant impact on the return on assets (ROA) of banks.