Can Turkeys Banking System Act as a Model To Buffer Global Financial Crises - Dissertation Example

Download file to see previous pages As a consequence, actors in the market emerged as cautious which was further exacerbated by doubts about primary financial institutions’ solvency. The inescapable result was a serious credit crunch which negatively impacted the real economy.

Turkey’s economy, no stranger to financial crises also suffered as a result of the global financial crisis of 2008. Even so, the global financial crisis had a limited impact on the Turkish Banking Sector compared to other developing and developing economies. The limited effects of the global financial crisis on Turkey’s banking sector are attributed to the post-November 2000 and February 2001 crises which commandeered reforms that made the banking sector stronger particularly with respect to capital structure and equity structure. Reforms following the 2000-2001 crises resulted in improvements in structural measures and supervision and regulation of Turkey’s Banking Regulation and Supervision Agency. Turkey also does not have an operating mortgage sector as the US has. Turkey’s Central Bank’s macroeconomic policies and measures taken by Turkey’s banks in response to the global financial crisis also contributed to the limited impact of the 2008 global financial crisis 2008.

At the same time, Turkey’s real economy suffered serious damages, thus making Turkey an interesting case study. Thus this dissertation seeks to determine whether or not a capital restructuring of financial institutions which creates a hard cap against loans and mortgages suppresses economic stimulation elsewhere.

Profits during the global financial crisis of the Turkish banking system were impressive compared to that of other countries including developed economies. While banks all over the world were collapsing, Turkey’s banks remained stable and registered profits. The Turkish banking system’s ability to withstand the 2008-2009 global financial crisis is generally attributed to its regulatory framework and risk protocols. The Turkish banking system has learned a lot with respect to responding to economic shocks and risk management following the financial crises of 2000-2001. As a result, the Turkish banking system devised precautionary and organizational constructs.

Following the 2000-2001 financial crisis, the Republic of Turkey introduced the Program for Transition to a Strong Economy, under which the banking sector was restructured. Public banks were subjected to both operational and financial restructuring and private banks were strengthened. ...Download file to see next pages Read More