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The Turkish Banking System, Financial Crises and the IMF in the Age of Capital Account Liberalization: A Political Economy Perspective*

Published online by Cambridge University Press:  21 July 2015

C. Emre Alper  and
Ziya Öniş
C. Emre Alper
Affiliation:
Department of Economics, Boğaziçi University, E-mail:, alper@boun.edu.tr
Ziya Öniş*
Affiliation:
Department of International Relations, Koç University
*
E-mail: zonis@ku.edu.tr
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Extract

Recent episodes of financial crises in emerging markets progressively highlighted the importance of a sound and well-functioning banking sector for macroeconomic stability and sustainable economic growth. The Asian crisis of 1997, in particular, drew attention to the fundamental role that a deficient banking system could play in terms of generating major financial crises with devastating repercussions on the real economy and with significant possibilities of contagion in an emerging market context. The recent twin economic crises experienced by Turkey in 2000 and 2001 illustrated in a rather dramatic fashion the strong correspondence between a poorly functioning and under-regulated banking system, on the one hand, and the sudden outbreak of macroeconomic crises on the other. Indeed, the Turkish experience shows that both public and private banks can contribute significantly to the outbreak of economic crises. In retrospect, it may be argued that private commercial banks played an instrumental role in the first of the twin crises experienced in November 2000, whilst, public banks emerged as the central actors in the context of the subsequent crisis of February 2001.

Type
Articles
Information
New Perspectives on Turkey , Volume 30 , Spring 2004 , pp. 25 - 54
Copyright
Copyright © New Perspectives on Turkey 2004

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Footnotes

*

We have benefited from detailed conversations with Tevfik Altinok, Dr. Hasan Ersel, and Dr. Ercan Kumcu and Hüseyin Al in the process of preparing the paper. An earlier version of the paper was presented at a workshop on financial crises in Turkey, at Oxford University, organized under the auspices of the Contemporary Turkey Program in February 2002, at a social science seminar at Koç University in March 2002 and at the Fourth Mediterranean Social and Political Research Meeting held at the European University Institute, Florence, Italy in March 2003. We would like to thank Dr. Fikret Adaman, Dr. Mehmet Kaytaz as well as the participants at the various meetings mentioned above. The contributions noted are gratefully acknowledged without implicating the individuals concerned for any errors and omissions. We also thank Doğan Asik and Evren Tok for their able assistance.

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