Estimation of the cost function of the Turkish banking industry and Oyakbank

Abstract

The purpose of this study is to estimate the cost function of the Turkish banking industry with the translog cost functional form, which permits the estimation of U-shaped average cost curves. In addition, this study falls short in explaining the position of OYAKBANK relative to the industry. The data information of 20 banks included in the estimation is annual and covers 1999 through 2001 for the industry. However, the annual data of OYAKBANK included in the estimation covers over the period from 1990 through 2001. I pool all the data and estimate by Iterative Seemingly Unrelated Regression (SUR) analysis.