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.
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Notes
- 1.
Turkish banking sector total cross-border liability has increased from USD 7.3 billion to USD 103 billion since 2002. Especially during the last 5 years, total cross-border banking liability to banking total assets rose on average from 8% to 13%.
- 2.
We calculate the ratio of IID to GDP using a 2014 data set of 15 countries that had the highest international investment deficit. For instance, USA’s IID-to-GDP ratio was around 0.4, while Turkey had a ratio of 0.55. Greece, Portugal, and Spain were among the top three countries that had the highest IID to GDP ratio.
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Aydemir, R., Ovenc, G. (2018). Capital Inflows and Banking in the Turkish Economy. In: Aysan, A., Babacan, M., Gur, N., Karahan, H. (eds) Turkish Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-70380-0_8
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DOI: https://doi.org/10.1007/978-3-319-70380-0_8
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