Capital Inflows and Banking in the Turkish Economy

  • Resul Aydemir
  • Gokhan Ovenc
Chapter

Abstract

We examine the developments in the Turkish banking industry in the context of capital and financial inflows specifically focusing on cross-border banking liability. First, we analyse how the Turkish economy, as an emerging market, has been affected by capital and financial inflows. Against this backdrop, we describe the transformation of the Turkish banking sector, paying special attention to the post-2001 period. In particular, we also investigate the impact of cross-border liability on the performance of Turkish banks. Finally, we evaluate the current outlook of the Turkish banking sector and offer some policy recommendations.

Keywords

Turkish banking industry Capital inflows Cross-border banking liability 

JEL Codes

E44 F3 G15 G21 

References

  1. Adrian, Tobias, and Hyun Song Shin. 2009. Money, Liquidity, and Monetary Policy, FRB of New York Staff No. 360. New York: Federal Reserve Bank of New York.Google Scholar
  2. Agenor, Pierre-Richard, C. John McDermott, and Murat Üçer. 1997. Fiscal Imbalances, Capital Inflows, and the Real Exchange Rate: The Case of Turkey. European Economic Review 41 (3): 819–825.CrossRefGoogle Scholar
  3. Akın, G. Gülsün, Ahmet Faruk Aysan, and Levent Yıldıran. 2009. Transformation of the Turkish Financial Sector in the Aftermath of the 2001 Crisis. In Turkey and the Global Economy: Neo-Liberal Restructuring and Integration in the Post-Crisis Era 73.Google Scholar
  4. Allen, Franklin. 2011. Cross-Border Banking in Europe: Implications for Financial Stability and Macroeconomic Policies. Washington, DC: CEPR.Google Scholar
  5. Aydemir, Resul, and Gokhan Ovenc. 2016. Interest Rates, the Yield Curve and Bank Profitability in an Emerging Market Economy. Economic Systems 40 (4): 670–682.CrossRefGoogle Scholar
  6. Aysan, Ahmet Faruk, Salih Fendoğlu, and Mustafa Kilinc. 2015. Macroprudential Policies as Buffer Against Volatile Cross-Border Capital Flows. The Singapore Economic Review 60 (01): 1550001.CrossRefGoogle Scholar
  7. BAT (The Banks Association of Turkey). 2016. Banks and Banking Sector Information. http://www.tbb.org.tr/en/banks-and-banking-sector-information/member-banks/list-of-banks/34. Accessed 15 Sep 2016.
  8. BIS (Bank for International Settlements). 2014. EME Banking Systems and Regional Financial Integration, Committee on the Global Financial System, CGFS Papers 51. http://www.bis.org/publ/cgfs51.pdf. Accessed 10 Jan 2016.
  9. ———. 2009. Capital Flows and Emerging Market Economies, Committee on the Global Financial System, CGFS Papers 33. http://www.bis.org/publ/cgfs33.pdf. Accessed 10 Jan 2016.
  10. ———. 2016. Locational Banking Statistics. http://www.bis.org/statistics/bankstats.htm?m=6%7C31%7C69. Accessed 15 Apr 2016.
  11. Brunnermeier, Markus, José De Gregorio, Barry Eichengreen, Mohamed El-Erian, Arminio Fraga, Takatoshi Ito, P. R. Lane et al. 2012. Banks and Cross-Border Capital Flows: Policy Challenges and Regulatory Responses, Committee on International Economic Policy and Reform. Washington, DC: Brookings.Google Scholar
  12. Bruno, Valentina, and Hyun Song Shin. 2014. Cross-Border Banking and Global Liquidity. The Review of Economic Studies 82 (2): 535–564.CrossRefGoogle Scholar
  13. Caballero, Julián A. 2016. Do Surges in International Capital Inflows Influence the Likelihood of Banking Crises? The Economic Journal 126 (591): 281–316.CrossRefGoogle Scholar
  14. Calvo, Guillermo A., Leonardo Leiderman, and Carmen M. Reinhart. 1996. Inflows of Capital to Developing Countries in the 1990s. The Journal of Economic Perspectives 10 (2): 123–139.Google Scholar
  15. ———. 2016. Monetary Policy, Interactive Charts, Current Account Balance. http://www.tcmb.gov.tr/wps/wcm/connect/TCMB+EN/TCMB+EN/Main+Menu/PUBLICATIONS/Reports/Financial+Stability+Report/2016/Volume+23/. Accessed 5 Mar 2017.
  16. Cowan, Kevin, De Jose Gregorio, Alejandro Micco, and Christopher Neilson. 2007. Financial Diversification, Sudden Stops and Sudden Starts. Banco Central de Chile. https://core.ac.uk/download/pdf/6642643.pdf. Accessed 22 Aug 2016.
  17. Hahm, Joon-ho, Hyun Song Shin, and Kwanho Shin. 2013. Noncore Bank Liabilities and Financial Vulnerability. Journal of Money, Credit and Banking 45 (s1): 3–36.CrossRefGoogle Scholar
  18. Herrmann, Sabine, and Dubravko Mihaljek. 2010. The Determinants of Cross-Border Bank Flows to Emerging Markets: New Empirical Evidence on the Spread of Financial Crises, Bundesbank Series 1 Discussion Paper No. 2010,17.Google Scholar
  19. Hills, Bob, and Glenn Hoggarth. 2013. Cross-Border Bank Credit and Global Financial Stability. Bank of England Quarterly Bulletin Q2: 126–136.Google Scholar
  20. Kara, Hakan. 2016. Turkey’s Experience with Macroprudential Policy, BIS Paper No. 86q.Google Scholar
  21. Kim, Young-Chul. 2003. Understanding the Silence Amid Turmoil: The Tobin Tax and East Asia. In Debating the Tobin Tax, ed. J. Weaver, R. Dodd and J. Baker, 135–150. Washington, DC: New Rules for Global Finance Coalition.Google Scholar
  22. Mercan, Muhammet, Arnold Reisman, Reha Yolalan, and Ahmet Burak Emel. 2003. The Effect of Scale and Mode of Ownership on the Financial Performance of the Turkish Banking Sector: Results of a DEA-Based Analysis. Socio-Economic Planning Sciences 37 (3): 185–202.CrossRefGoogle Scholar
  23. Mishkin, Frederic S. 2009. Why We Shouldn’t Turn Our Backs on Financial Globalization. IMF Staff Papers 56 (1): 139–170.CrossRefGoogle Scholar
  24. Rajan, Ramkishen. 1998. Restraints on Capital Flows: What Are They? No. 22383. East Asian Bureau of Economic Research.Google Scholar
  25. Roubini, Nouriel, and Paul Wachtel. 1999. Current-Account Sustainability in Transition Economies. In Balance of Payments, Exchange Rates, and Competitiveness in Transition Economies, ed. M.I. Blejer and M. Škreb, 19–93. Boston: Springer.CrossRefGoogle Scholar
  26. Shin, Hyun Song. 2014. The Second Phase of Global Liquidity and Its Impact on Emerging Economies. In Volatile Capital Flows in Korea, ed. K. Chung, S. Kim, H. Park, C. Choi, and H.S. Shin, 247–257. New York: Palgrave Macmillan.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Resul Aydemir
    • 1
  • Gokhan Ovenc
    • 2
  1. 1.Department of EconomicsIstanbul Technical UniversityIstanbulTurkey
  2. 2.Department of EconomicsIstanbul UniversityIstanbulTurkey

Personalised recommendations