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The Regulation of the Credit Card Market in Turkey

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  • Aysan, Ahmet Faruk
  • Lerzan, Yildiz

Abstract

The rapid growth in Turkish credit card market brought together new issues. Card holders and consumer unions complain about the high interest rates, economists complain about the default rates and banks complain about the amnesties. After all of these complaints coinciding with the accelerating suicide incidences due to credit card debts, regulation has been enacted in the credit card market in Turkey. In 2003, credit cards had been taken into the scope of the Consumer Protection Law. This was the first legal arrangement on the credit cards. However it was not satisfying. It was criticized for bringing out temporary solutions. In 2005, a more comprehensive credit card law came into effect. With this regulation, Central Bank of Turkey has put a ceiling on the credit card interest rates and clarified some issues that were left untouched. In this paper; reasons, advantages, disadvantages of this regulation are discussed along with a quick glance on the development of credit card market in Turkey. The regulation and amnesties in 2003 and 2005 are examined and their effects are exposed from the point of view of parties involved: banks, customers and government.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5490.

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Date of creation: 2006
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Handle: RePEc:pra:mprapa:5490

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Keywords: Credit Cards; Regulation; Amnesty; Interest Rates; Default; Banks; Consumer Unions;

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References

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  1. Ahmet Faruk Aysan & A. Muslim, 2006. "The Failure of Competition in the Credit Card Market in Turkey: The New Empirical Evidence," Working Papers, Bogazici University, Department of Economics 2006/09, Bogazici University, Department of Economics.
  2. Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, American Economic Association, vol. 81(1), pages 50-81, March.
  3. Joshua S. Gans & Stephen P. King, 2003. "A Theoretical Analysis of Credit Card Reform in Australia," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 79(247), pages 462-472, December.
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Cited by:
  1. Aysan, Ahmet Faruk & Ceyhan, Şanli Pinar, 2008. "What determines the banking sector performance in globalized financial markets? The case of Turkey," Physica A: Statistical Mechanics and its Applications, Elsevier, Elsevier, vol. 387(7), pages 1593-1602.
  2. Caner Bakir & Ziya Onis, 2009. "The Emergence of the Regulatory State: The Political Economy of Turkish Banking Reforms in the Age of Post-Washington Consensus," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 0905, Koc University-TUSIAD Economic Research Forum.
  3. Ahmet Faruk Aysan & Ali Gunes & Osman Furkan Abbasoglu, 2007. "Concentration, Competition, Efficiency and Profitability of the Turkish Banking Sector in the Post-Crises Period," Working Papers, Bogazici University, Department of Economics 2007/20, Bogazici University, Department of Economics.

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