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Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey

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  • H. Al
  • Ahmet Faruk Aysan

Abstract

Recent financial crises highlight weaknesses in financial markets and the need for regulatory and supervisory bodies (RSB) to improve the stability of financial markets. Currently, international institutions like the IMF and the World Bank place the independent RSB among their principle policy recommendations to developing countries. This paper acknowledges the importance of independent RSB for the proper functioning of financial markets. However, this paper also points out the preconditions to establish independent RSB. Unless certain prerequisites are satisfied, policy recommendations to construct an independent RSB are doomed to fail. The recent Turkish experience is provided as a case study to elucidate this conclusion. This paper first presents the arguments for independent RSB and the policy recommendations in institution building for stronger financial system. Then, the background of Turkish experience for independent RSB is provided. Finally, we analyze the primary reasons for the deficient performance of Turkish RSB over the last five years in an attempt to provide actual lessons for the future institutional reforms.
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Suggested Citation

  • H. Al & Ahmet Faruk Aysan, 2006. "Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey," Working Papers 2006/06, Bogazici University, Department of Economics.
  • Handle: RePEc:bou:wpaper:2006/06
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    References listed on IDEAS

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    1. International Monetary Fund, 1998. "Turkey; Recent Economic Developments and Selected Issues," IMF Staff Country Reports 98/104, International Monetary Fund.
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    Citations

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    Cited by:

    1. Ahmet Faruk Aysan & Mustafa Haluk Güler & Cüneyt Orman, 2013. "Sustaining growth in emerging markets: the role of structural and monetary policies," Chapters,in: A New Model for Balanced Growth and Convergence, chapter 9, pages 122-144 Edward Elgar Publishing.
    2. Adnan Kasman & Saadet Kasman, 2016. "Bank size, competition and risk in the Turkish banking industry," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 43(3), pages 607-631, August.
    3. Aysan, Ahmet Faruk & Ermişoğlu, Ergun, 2013. "Eurozone Debt Crisis and its Effects on Turkish Economy," MPRA Paper 50501, University Library of Munich, Germany.
    4. Aysan, Ahmet Faruk & Ceyhan, Sanli Pinar, 2006. "Globalization of Turkey’s Banking Sector: the Determinants of Foreign Bank Penetration in Turkey," MPRA Paper 5489, University Library of Munich, Germany.
    5. 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, vol. 387(7), pages 1593-1602.
    6. Ahmet AYSAN & Cagri HUSNU DALGIC & Murat DEMIRCI, "undated". "Macroeconomic, Sector Specific and Bank Specific Determinants of Net Interest Rate Margin: What Matters More For An Emerging Market Economy?," EcoMod2010 259600015, EcoMod.
    7. Akin, Guzin Gulsun & Aysan, Ahmet Faruk & Yildiran, Levent, 2008. "Transformation of the Turkish Financial Sector in the Aftermath of the 2001 Crisis," MPRA Paper 17803, University Library of Munich, Germany.
    8. Aysan, Ahmet Faruk & Ertek, Gurdal & Ozturk, Secil, 2009. "Assessing the adverse effects of interbank funds on bank efficiency through using semiparametric and nonparametric methods," MPRA Paper 38113, University Library of Munich, Germany.
    9. Meryem Duygun Fethi & Mohamed Shaban & Thomas Weyman-Jones, 2012. "Turkish Banking Recapitalization and the Financial Crisis: An Efficiency and Productivity Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(S5), pages 76-90, November.
    10. 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 2007/20, Bogazici University, Department of Economics.
    11. E. Nur Ozkan Gunay, 2012. "Risk Incorporation and Efficiency in Emerging Market Banks During the Global Crisis: Evidence from Turkey, 2002-2009," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(S5), pages 91-102, November.
    12. Meryem Duygun Fethi & Mohamed Shaban & Thomas Weyman-Jones, 2012. "Turkish Banking Recapitalization and the Financial Crisis: An Efficiency and Productivity Analysis," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(S5), pages 76-90, November.
    13. E. Nur Ozkan Gunay, 2012. "Risk Incorporation and Efficiency in Emerging Market Banks During the Global Crisis: Evidence from Turkey, 2002-2009," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(S5), pages 91-102, November.
    14. Aysan, Ahmet Faruk & Güler, Mustafa Haluk & Orman, Cüneyt, 2013. "The Road to Sustainable Growth in Emerging Markets: The Role of Structural and Monetary Policies in Turkey," MPRA Paper 44730, University Library of Munich, Germany.
    15. Ahmet Faruk Aysan & S. P. Ceyhan, 2006. "Globalization of Turkey's Banking Sector: The Determinants of Foreign Banking Penetration in Turkey," Working Papers 2006/20, Bogazici University, Department of Economics.

    More about this item

    JEL classification:

    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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