Which firms engage small, foreign, or state banks? And who goes Islamic? Evidence from Turkey

Ongena S., Sendeniz-Yuencue I.

JOURNAL OF BANKING & FINANCE, vol.35, no.12, pp.3213-3224, 2011 (Peer-Reviewed Journal) identifier identifier

  • Publication Type: Article / Article
  • Volume: 35 Issue: 12
  • Publication Date: 2011
  • Doi Number: 10.1016/j.jbankfin.2011.05.001
  • Journal Indexes: Social Sciences Citation Index, Scopus
  • Page Numbers: pp.3213-3224
  • Keywords: Islamic banking, Turkey, Lending relationships, GOVERNMENT OWNERSHIP, CHOICE, MULTIPLE, MARKETS, IMPACT, SIZE, LAW


We study a representative dataset from Turkey that identifies firm-bank connections. Banks in Turkey differ not only in size and nationality, but also in ownership and orientation (non-Islamic versus Islamic)-resulting in at least six distinct bank types. We estimate a multinomial logit of the choice by the firm of bank type. We document a strong correspondence between bank type and firm characteristics that is not always the same as has been documented so far for US datasets. For example, small firms engage large rather than small banks. Young, large, multiple-bank, and industry-diversified firms, that are located in or close to Istanbul, team up with foreign banks. Islamic banks mainly deal with young, multiple-bank, industry-focused and transparent firms. (C) 2011 Elsevier B.V. All rights reserved.