External Audit and Asymmetric Information Problem: Alternative Framework in Public BankingAbstract: As an important policy instrument within the financial system, public banks assumed greater responsibility with the expansion of statist policies during the Great Depression of 1929. While maintaining and expanding its market share in the banking sector, Turkish Public Banking has undertaken the task of providing service for the benefit of the public and has increased its efforts to compete in global markets through the expansion of its customer portfolio - product range and financial innovations in information technologies lately. On the other hand, asymmetric information problem stemming from information pollution prevents the effective functioning of the audit mechanism, which is normally set to run based on accurate and complete information, and adversely affects the risk management processes of public banks. This study presents a proposal of an external audit model-“The Insured Customer-Based External Audit in Public Banking Model”. The model proposed will contribute to the present financial system in terms of strengthening the legal power of the related institutions with the aim of reducing asymmetric information and increasing efficiency of external auditing in public banks. SWOT analysis has been conducted over the proposed model for greater understanding of its applicability and to reveal its possible effects in the banking sector. The results derived from the preferred method used in the study will pave way for the implementation of different numerical research methods in the future such as multi-criteria decision-making techniques in the same area of research

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