Turkish Banking: Banking Under Political Instability and Chronic High Inflation (Palgrave Macmillan Studies in Banking and Financial Institutions)

Alongside the successful IMF-led disinflation program, the potential start of negotiation talks for Turkey's membership of the European Union is likely to intensify the interest of foreign investors in Turkey's economy. This book explores the evolution and performance of the Turkish banking sector. In particular, the repercussions of overall economic structure, financial crises and political instability on its financial sector are analyzed. Further, the prospects for the future of banking sectors in the context of ongoing economic restructuring and EU integration are scrutinized. Cover......Page 0 Contents......Page 5 List of Figures and Tables......Page 9 Preface......Page 14 List of Abbreviations......Page 16 About the Authors......Page 18 1 Introduction......Page 21 The Ottoman period and the early Republic......Page 27 Liberalization in the 1950s......Page 30 Import substitution and inward-orientated growth strategy, 1960–79......Page 32 1980–90......Page 35 1990–2000......Page 39 1994 economic crises......Page 41 2000–01 twin economic crises......Page 44 Recent economic trends......Page 47 Renewal of the standby agreement with the IMF, 2005......Page 50 A short history of political instability......Page 51 Conclusion......Page 57 Appendix 2.1......Page 58 Appendix 2.2......Page 59 Introduction......Page 60 Banking in the Ottoman period......Page 61 The new Republic and the establishment of the new national banks......Page 62 The period of state-owned banks, 1932–45......Page 63 Establishment of private banks, 1945–60......Page 64 Banking in the planned economy, 1960–79......Page 65 Banking after financial liberalization......Page 67 Banking and financial markets in the 1990s......Page 70 Aftermath of the 1994 crisis......Page 74 Establishment of the Banking Regulation and Supervisory Agency......Page 75 Recent developments, 2000–06......Page 77 SDIF and the restructuring process......Page 78 Recovery......Page 80 Dollarization, crowding-out by government debt and maturity mismatch......Page 82 Conclusion......Page 84 Appendix 3.1......Page 86 Appendix 3.2......Page 88 Size of the Turkish banking sector......Page 89 Branch systems of the Turkish banking sector......Page 93 Employment in the Turkish banking sector......Page 94 Big banks......Page 97 State-owned versus privately-owned banks in Turkey......Page 98 Assets structure, loans and liquid assets......Page 99 Liability structure, deposits and equity......Page 106 Income structure of Turkish banks......Page 107 Cost structure of Turkish banks......Page 109 Performance of the Turkish banking sector......Page 110 Capital adequacy......Page 111 Asset quality......Page 112 Profitability......Page 113 Financial strength indices......Page 115 Conclusion......Page 116 Introduction......Page 117 A brief literature review: financial development and economic growth......Page 118 Data and methodology......Page 122 Economic growth and financial development indicators......Page 123 Correlation matrices......Page 125 Regression results......Page 126 Conclusion......Page 129 Introduction......Page 131 Fundamentals of efficiency and productivity......Page 132 Data sources......Page 135 Data envelopment analysis (DEA) method......Page 138 Tobit regression: accounting for environmental variables......Page 142 Nonparametric productivity measurement of Turkish banks......Page 143 DEA–Malmquist index technique......Page 147 Technical efficiency scores of Turkish banks......Page 149 Productivity scores of Turkish banks......Page 154 Conclusion......Page 160 Appendix 6.1......Page 163 Appendix 6.2......Page 164 Appendix 6.3......Page 170 The stock market in Turkey......Page 171 Initial public offerings (IPOs)......Page 177 Primary markets in Turkey......Page 180 Over-the-counter market......Page 181 ISE bonds and bills market......Page 182 Leasing, factoring and consumer finance companies in Turkey......Page 184 Special financial institutions......Page 186 Conclusion......Page 187 Reshaping the Turkish financial system towards potential EU membership......Page 189 Implementation of Basel II in Turkey......Page 193 Pillars 2 and 3......Page 194 Can Turkish banks cope with Basel II?......Page 195 Introduction of a mortgage system and a new mortgage law......Page 196 Foreign direct investment in Turkish banking......Page 199 Conclusion......Page 204 Appendix 8.1......Page 206 9 Concluding Remarks......Page 211 Notes......Page 215 References......Page 218 B......Page 230 D......Page 231 F......Page 232 I......Page 233 N......Page 234 R......Page 235 T......Page 236 Z......Page 237 "Despite the fact that Turkey is the 17th largest economy in the world why is its banking system still relatively small? Why did Turkey face four crises over the last two decades with the latest resulting with the failure of 13 banks and 50,000 banking jobs? What prompted the recent historical amount of foreign investment in the Turkish banking industry? This book, intended for both academics and practitioners, provides insight to these questions by examining the past, present and future of Turkish banking. At the outset it portrays the phases of banking sector development in Turkey with a major emphasis given on of financial crises and their repercussion on the banking industry. Then the financial structure and performance of banking sector together with its impact on economic growth is scrutinized. Lastly, it looks at the future prospects of Turkish banking within the context of EU integration, foreign investments, and growth potential of the newly introduced mortgage market."--Jacket In light of Turkey's EU bid and the successful IMF-led disinflation program, this book explores the evolution and performance of the Turkish banking sector. Analyzing the repercussions of overall economic structure, financial crises and political instability on its financial sector, it scrutinizes the prospects for the future of banking sectors.