The Impacts of Financial Variables on Employment Planning in Turkish Banking Sector

The Impacts of Financial Variables on Employment Planning in Turkish Banking Sector

Hasan Dinçer (School of Business and Management Sciences, Istanbul Medipol University, Istanbul, Turkey), Ümit Hacıoğlu (School of Business and Management Sciences, Istanbul Medipol University, Istanbul, Turkey) and Serhat Yüksel (School of Business and Management Sciences, Istanbul Medipol University, Istanbul, Turkey)
DOI: 10.4018/IJSECSR.2016070101
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Abstract

Understanding investors' perception begins with questioning their position on risky assets and portfolio selection strategies in volatile market conditions. In banking sector, the performance of banks relies on operational and technical efficiency levels. In the last decade, stakeholders have been facing the dilemma of whether or not to deploy expensive employment programs with high quality personnel as the effects of these programs on banking performance have not been clearly examined in the literature. In this study, it is aimed to assess the role of financial and non-financial factors on employment programs which contribute to the banking efficiency and performance. Within this scope, the analysis conducts with the annual data for the periods between 1988 and 2015 is tested by using logit model for three different groups of Turkish banks based on ownership structure. Empirical findings demonstrate that (1) internal variables are more significant than the external variables in employment programs of these banks, (2) with respect to state-owned banks, it is identified that higher non-interest income affects the employment decision positively, (3) private banks prefer to have fewer employees in case of any decrease in the total loans amount and (4) financial variables are influential for these banking groups to increase or decrease the number of personnel.
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2. Literature Review

Related studies in the field play a great role in understanding the effective management of banks and performance assessment. However, there is still a need to determine and assess the role of financial and non-financial determinants of banking performance. Especially, employment policy and program should be examined in an extensive way as it is systematically affected by economic turbulence or increase in national income. Moreover, the extensive research on the examination of employment policy based on its contribution and cost should be also assessed by practitioners and scholars in the field. Strategically, efficiency based studies demonstrate financial factors of banking performance. Especially, operational efficiency based on the personnel outputs determines the level of returns on equity and assets. Owing to this issue, cost planning is a very significant aspect for the banks in order to increase the performance. In this process, effective personnel planning will be very helpful for the banks to make a successful cost planning.

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