The effect of loan to deposit ratio(LDR), interest income ratio, and non-interest income ratio on average return on equity(ROE)

ABSTRACT: In this study, the effect of Interest Income/Total Assets ratio, Non-Interest Income/Total Assetsratio, and Total Loans/Total Deposit ratio (LDR) on average return on equity ratio(ROE) was examined. Amultiple regression analysis was applied with R-Studio program using the data of Ziraat Bank, one of the publicbanks operating in Turkey, between the years 2003-2021. The following results were obtained. The effect of theLDR independent variable on the ROE dependent variable is significant and negative, the effect of interestincome ratio independent variable on the ROE dependent variable is statistically insignificant and negative, andthe effect of non-interest income ratio independent variable on the ROE dependent variable is significant andpositive. 55.16% of the variation in ROE is explained by the independent variables in the model. In this study, itwas aimed to determine the simultaneous and partial effects of loan to deposit ratio(LDR), interest income ratio,and non-interest income ratio on average return on equity ratio and to contribute to other researchers.

KEYWORDS : Loan to Deposit Ratio(LDR), Interest Income, Non-Interest Income, Return on Equity (ROE)