This book presents a detailed analysis of the Turkish banking and financial markets. The emphasis of the book is on the interrelations between competition and regulation. The author's hope is to draw attention to the close relationship between the regulatory environment and the nature of the competition in the banking and financial markets in Turkey. Also, this book looks into various aspects of the banking and financial markets and the authors discuss the relationships between regulatory environment and competition in the industry.

This book presents a detailed analysis of the Turkish banking and financial markets. The emphasis of the book is on the interrelations between competition and regulation. The author's hope is to draw attention to the close relationship between the regulatory environment and the nature of the competition in the banking and financial markets in Turkey. Also, this book looks into various aspects of the banking and financial markets and the authors discuss the relationships between regulatory environment and competition in the industry.

November 1997 Promoting competition in Turkey's newly liberalized financial market requires striking a balance between potentially conflicting objectives and the risk entailed in financial deregulation. Banking must be regulated and well-supervised, but Turkey's banking system also needs to become far more competitive. Until 1980, Turkey's financial system was shaped to support state-oriented development. After the 1960s, the financial system, dominated by commercial banks, became an instrument of planned industrialization. Turkey had an uncompetitive financial market and an inefficient banking system. Controlled interest rates, directed credit, high reserve requirements and other restrictions on financial intermediation, and restricted entry of new banks Ñ plus the exit of many banks betwee 1960 and 1980 Ñ created a concentrated market dominated by banks owned by industrial groups with oversized branch networks and high overhead costs. Turkey since 1980 has seen a trend toward liberalization of its financial market. Reforms eliminated interest rate controls, eased the entry of new financial institutions, and allowed new types of instruments. Regulatory barriers were relaxed, attracting many banks (both Turkish and foreign) into the system, and Turkey's banking system became integrated with world markets. Denizer examines how reform has changed the system, focusing on Turkey's commercial retail banking market. He finds that: * Although reform reduced concentration in the industry, leading banks are still able to coordinate their pricing decisions overtly. High profitability appears to have resulted from the banks' uncompetitive pricing rather than their efficiency. Deregulation and liberalization should be continued and strengthened. * The entry of small-scale firms alone is not enough to increase competition, so new banks should probably not be expected to alter the market structure. * To promote competition will require addressing barriers to both entry and mobility. The main barrier to mobility seems to be the size of the large banks, which exerts a significant negative effect on competition. * Interbank rivalry among the leading banks can't be facilitated without creating new banks of a certain size with a reasonable number of branches. Breaking up public banks (which hold 30 percent of sectoral assets, excluding the Agricultural Bank and three development banks) could help create 15 to 20 new banks with 40 to 50 branches. This would reduce concentration and improve mobility in retail banking. * Breaking up the public banks before privatization would probably also improve their governance structures and efficiency. * Promoting the entry of nonbanks and local banks would also increase the number of institutions competing for deposits. Turkey lacks a healthy variety of credit institutions and should consider developing a mortgage market and creating institutions for housing finance. This paper-a product of the Development Research Group-is part of a larger effort in the group to study financial reforms and financial markets.

2011 Updated Reprint. Updated Annually. Turkey Banking & Financial Market Handbook

Currently, Turkey's financial services industry is in an early stage of development with credit markets dominated by banking and capital markets dominated by Government securities. Longstanding macro-economic instability and inflation have discouraged investment in financial assets and crowded out funding for the private sector. The resulting lack of depth and breadth has made the financial sector in Turkey vulnerable to shocks resulting in repeated crises, and has diminished its intermediation efficiency. This study analyzes the state of development and prospects for future growth of Turkish non-bank financial institutions and capital markets. It identifies the key policy issues that should be addressed in order to develop non-bank financial institutions in Turkey. Some of the themes included in the discussion and policy recommendations are: mobilizing savings; building an institutional investor base comprising insurance companies, private pension funds, and mutual funds; developing equity markets, debt markets, and derivative markets; developing leasing, factoring and venture capital companies; and strengthening confidence in financial markets through improved corporate governance.

The Political Economy of Regulation in Turkey brings together leading international scholars and experts on Turkey and regulatory reform to provide essential information on the recent Turkish experience and its relation to competition policy. After the 1980 liberalization reform, Turkey tried to introduce competition in many industries, but network industries have remained as monopolies. At the end of the 1990s, regulatory reform was initiated and independent regulatory agencies have been established by the government. Comprehensive discussions of these network industries, in particular airlines, electricity, natural gas, telecommunications and environment regulations, are offered. The contributors inquire how economic theory and historical analyses can enlighten the character of market processes and the role for government action in these industries, and the contributions shed light on the very recent changes in the regulatory structure and important legal cases that shape the future of regulated industries. This book discusses these issues in an international perspective and relates the Turkish experience to other similar countries, such as in Eastern Europe and Central America. This book serves as a useful guide to those who want to understand major changes in Turkey and regulatory reforms in other emerging markets, making it of interest to researchers and PhD students concerned with regulatory economics, the Turkish economy, and economic policy in emerging markets.