TÜRK EKONOMİSİ - Deneme Sınavı - 5

Some goals and objectives of the Capital Markets Board of Turkey are listed as follows:

• Enhancing the infrastructure of the capital markets.

• Promoting fairness and transparency in the capital markets.

• Developing investor protection.

• Enhancing and promoting the effectiveness of both the demand and supply sides of the capital markets.

• Following the international capital market regulations and adopting them into domestic markets (CMBT, 2019).

The Turkish finance sector was dominated by the banking sector with a few products before the 1980s. Credit programmes based on the controlled interest rates, highly controlled capital account, entry restriction into the banking system, lack of competition and efficiency, a financial transaction in shallow markets, bank-dominating finance market, and strict and high reserve requirements were the main characteristics of the period (Serbes, 2014). The regulated interest rates before the 1980s caused banks to compete for deposit collection across countries by opening new branches

By the end of 2018, the total number of banks operating in Turkey was 51. 32 of these banks are deposits, 6 of them are participation and rest of them are development/investment.

One of the most critical indicators of the outlook of the banking sector is non-performing loans. All loans are categorized into five groups: Standard, closely monitored, limited collectability, doubtful and non-performing (Karacal and others, 2013). The increase in non-performing loans indicates that loans are problematic in terms of repayment which adversely affects the well-being of the banking sector.

The revised Basel III criteria deal with credit risk in more detail. Firms are subjected to a more sensitive credit risk analysis according to their economic scales (large, medium or small) and sectors. Additionally, the weighted risk assessment is performed for off-balance sheet items, debt and equity.

Other significant indicators highlighted by the Basel III criteria are the capital requirement, credit valuation, output floor, operational risk, and leverage ratio.

The Basel III standards are mainly based on 3 principles: minimum capital requirements, effective supervision and financial discipline.

Participation banks in Turkey gained the bank statue in 2005. They provide interest-free financial and banking services. The development of interest-free alternative investment instruments also facilitates the inclusion of the unrecorded savings into the system...Participation banks in Turkey gained bank status in 2005.

In order to better manage foreign currency borrowing, some regulations have been made since 2001 and these regulations have been revised according to the conditions of the period. These regulations, which were carried out under the leadership of the CBRT and BRSA.

The banking system as a mediator between money and individual/corporate economic actors has the potential to increase the fragility of real and financial markets if it is not well regulated and supervised since banks supply loans to investors, firms, consumers through credit channels. Any instability in the banking system will harm the credit channels and thus the general economy.

The Banking Regulation and Supervision Agency carries out the functions of regulation, supervision and enforcement within the aim of providing reliability and stability in financial markets, ensuring the efficient running of the credit system, protecting rights and interests of savers and developing financial sector considers strategic planning as one of the main instruments to fulfill its duties effectively

Another significant institution related to regulations is the Capital Markets Board of Turkey (CMBT). “It aims to ensure efficient and extensive involvement of the public to economic development through transforming investments into securities and protect the rights and benefits of investors by promoting the principles of fairness, transparency and stability in the capital market.” (CMBT, 2019). Some goals and objectives of the Capital Markets Board of Turkey are listed as follows:
• Enhancing the infrastructure of the capital markets.
• Promoting fairness and transparency in the capital markets.
• Developing investor protection.
• Enhancing and promoting the effectiveness of both the demand and supply sides of the capital markets.
• Following the international capital market regulations and adopting them into domestic markets. 

Nowhere in the chapter "promoting increase in the capacity of capital markets" is listed as one of the goals and objectives of the Capital Markets Board of Turkey

The Banking Regulation and Supervision Agency (BRSA) and the Capital Markets Board of Turkey (CMBT) are two key and significant public institutions that supervise the Turkish financial markets

Characteristics of Turkish Financial and Banking Sector Prior the 1980s Control on Interest Rates Directed Credit Programme Uncompetitive and Inefficient Banking Sector Finance Sector Dominated By Banking Sector Very Few Foreign Banks Few Banking Products and Services Entry Barriers in Banking Sector High Duty Losses of Public Banks

Banks

Participation Banks

Saving Deposit Insurance Fund

Leasing Companies

Factoring Companies

Consumer Finance Companies

NPL Management Companies

Banks are at the center of the regulations regarding the financial system due to the fact that they constitute the largest portion of financial institutions in the Turkish economy

With the financial globalization, the opportunities of local firms to obtain loans from foreign markets have improved considerably. Compared to domestic borrowing opportunities, firms can find cheaper loan alternatives, but it might create a big risk related to exchange rate volatility

The Basel Criteria was set to manage the international risk faced by the sector. These new banking and finance standards, the Basel Criteria, aimed to strengthen the capital infrastructure of the banking sector

significant indicators highlighted by the Basel III criteria are the capital requirement, credit valuation, output floor, operational risk, and leverage ratio.

Digitalization can be seen as a technology shock that influences the main economic indicators through productivity.

Turkey started to implement the Financial Inclusion Strategy in 2014 before the tenth annual meeting of the G20, where heads of governments participated in the G20 summit held in Turkey. In this G20 summit held in 2015, Turkey declared that financial inclusion will be one of the country’s priorities to achieve sustainable growth. Turkey began to remove some barriers in access to financial services especially for the young, the women, and small-medium scale firms.