The Turkish Banking sector is expected to operate in crunchy
year in 2014. The concerns related with Fed's actions that
might result with the end of monetary expansion clearly signals
that the year 2014 might be tough one for the emerging economies.
If the much feared action will be taken by the Fed it seems that
the amount of liquidity that have been financing high growth in the
emerging markets might dry up. Banking industries that are
confronted with such a scenario in the emerging markets will have
to be well regulated in order to deal with such market
Especially given the American experience with the banking sector
in 2008 crisis when the country was rocked by the banking scandals
should serve as an example for the global banking sector to assure
the authorities that such a critical sector should be well
regulated. What the American experience had already thought us is
the need for banking regulations with regard to two specific areas;
predatory lending practices and toxic assets. Especially the
creation of toxic assets by dividing the subprime mortgages and
combining them with various different financial instruments had
created an enormous risk both for the investors and for the market
itself. Such toxic assets when combined with predatory lending
practices where the creditors not only have lent enormous amounts
of credits that the barrowers were not capable of paying back but
also have deliberately urged them to take such credits.
This is a grave problem that the industry has to deal not with more
deregulation but with more regulation.
Turkish Banking Industry: A Well Regulated Market
Turkish banking industry is a well regulated one. Especially the
banking crisis that have taken place in 2001 led the Turkish
authorities to regulate the banking industry. Turkish banks today
do not only have much better lending practices but also have much
healthier capital adequacy rates. The industry has already achieved
compliance with the Basel II standards and has taken a headway for
the compliance with the Basel III standards compared to many
However strong the Turkish banking system it is clear that the
year 2014 will be a very difficult one. Especially problematic for
the Turkish economy is the low level of national savings which
stands only around 12% of the GDP. Such a low level of national
savings have already been combined with a high current account
deficit that exceeds USD$ 60 billion and created a concern for the
shape that the national economy will take. Expectedly the
authorities have recently taken measures to cut down spending in
order to boost national savings. This policy of spending cuts means
a banking sector which has to find a way to operate in a market
where demand for banking credits have been made reduced by
regulations. Especially important for the Turkish banking sector is
the latest regulations that has reduced the number of installments
in to one in purchases for consumer electronics and restricted the
number of installments for automobile purchases to 24 where the
previous regulation had allowed number of installments up to 48.
Given the heavy dependence of the Turkish consumers on banking
credits in the form of long term installments, this latest
regulation will make the banking industry to shift its focus.
Turkish banks are expected to shift their focus away from the
average citizen, who only has the financial capacity to pay back
the loans in long term installments, to the world of industry where
the businessman has enough financial clout to pay back the loans
lent by the banking industry. This might mean a good news for the
national economy given the fact that in this scenario much needed
credits will most likely be available not for fueling personal
spending and hence lowering down national savings but for the
industrial world where the growth means more employment for the
Turkish people and better growth for the national economy.
Therefore such a process might end with the right allocation of
much needed credits in the country.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under Regulation (EU) No. 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories ("EMIR")...
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