THE RELATIONSHIP BETWEEN ADVERTISING SPENDS AND BANKS' PERFORMANCE IN THE TURKISH COMMERCIAL BANKING SECTOR

Abstract

Commercial banks, which are indispensable tools of monetary policy in the economy, are the most important commercial institutions of financial markets; informs its consumers about the services and products they produce and encourages them to buy. Therefore, they use advertising as a tool to increase their profits. At the same time, advertising activities also require costs. There is sufficient logical reason to believe that advertisements affect the consumer not only during the reporting period, but also in subsequent periods. The effects and benefits of advertising will continue into the future. Advertising expenditures in this context are similar to paid capital today. Thus, from the point of view of economic and statistical analysis, advertising expenditure does not affect the activities of commercial banks as an expense today, but as a capital good that will benefit in the future. From this point of view, it is necessary to measure the effect of advertising expenditures on business performance. In this context, the relationship between the advertising costs of commercial banks and their effectiveness is the subject of this study. In this study; The relationship between advertising expenditures and performance in the commercial banking sector was examined by creating a panel data set. The performance of commercial banks in the data set; Return on assets and return on equity were defined as dependent variables, while advertising expenditures were defined as independent variables. The stationarity of the panel data was tested using Hadri, Im, Pesaran & Shin and Phillips & Perron unit root tests. Then, a long-term relationship between the variables was tested using the Pedroni test. Finally, a causal relationship between variables was measured using the Granger test. According to the results of the unit root tests, it has been seen that the variable (advertising expenditures, return on assets and equity) series that make up the panel data set are stationary in the trended and fixed models at the level. As a result of Pedroni cointegration analysis, it has been determined that advertising expenditures are cointegrated with performance variables. As a result of the Granger causality test, it was determined that both of the advertising expenditures performance variables were Granger causes. At the same time, the direction of the relationship is from one-sided and advertising expenditures to the return on assets and return on equity, which are performance variables.