The Experience with Macro-Prudential Policies of the Central Bank of the Republic of Turkey in Response to the Global Financial Crisis

This brief country case study on Turkey aims to summarize the fundamental developments in the banking sector, which represents almost 90 percent of the financial sector in the country. The brief has two parts. The first covers the 2001 financial cr...

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Bibliographic Details
Main Authors:	Kenc, Turalay, Turhan, M. Ibrahim, Yildirim, Onur
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ADVANCED ECONOMIES ASSET QUALITY ASSETS ASSETS RATIO BALANCE OF PAYMENTS BALANCE SHEET BANK BALANCE SHEETS BANK CREDITS BANK OF ENGLAND BANK OF JAPAN BANK POLICIES BANK RUN BANKING CRISIS BANKING LAW BANKING REGULATION BANKING SECTOR BANKING SYSTEM BORROWING BUFFER CAPITAL ACCOUNTS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL FLOWS CAPITAL GAIN CAPITAL INFLOW CAPITAL INFLOWS CAPITAL STRUCTURE CAPITAL STRUCTURES CENTRAL BANK CENTRAL BANK POLICIES CENTRAL BANKS CONSOLIDATION CONSOLIDATION PROCESS CONSUMER CREDITS CONSUMER LOANS CONSUMER PRICE INFLATION CORPORATE GOVERNANCE COUNTRY ECONOMIES CREDIT CARD CREDIT CARDS CREDIT EXPANSION CREDIT GROWTH CREDIT MARKETS CREDIT RISK CREDITORS CURRENCY SWAPS CURRENT ACCOUNT CURRENT ACCOUNT BALANCE CURRENT ACCOUNT DEFICIT DEBT STOCK DEBTORS DEFICITS DEMAND DEPOSITS DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSIT INTEREST DEPOSIT INTEREST RATES DEPOSITS DEPRECIATION DOMESTIC DEMAND DOMESTIC LIQUIDITY DUE DILIGENCE ECONOMIC CRISIS ECONOMIC GROWTH ECONOMIC MODEL ECONOMIC POLICIES EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET COUNTRIES EMERGING MARKET ECONOMIES EMERGING MARKETS EUROPEAN CENTRAL BANK EXCESS LIQUIDITY EXCHANGE RATE EXCHANGE RATE CHANNEL EXCHANGE RATE MISALIGNMENTS EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATE UNCERTAINTY EXCHANGE RATES EXCHANGE-RATE EXIT STRATEGY FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL REGULATION FINANCIAL RISKS FINANCIAL SECTOR FINANCIAL STABILITY FINANCIAL STABILITY OBJECTIVE FINANCIAL STABILITY OBJECTIVES FISCAL DISCIPLINE FISCAL POLICY FOREIGN BANKS FOREIGN CURRENCY FOREIGN CURRENCY RISK FOREIGN CURRENCY RISKS FOREIGN EXCHANGE FREE BANKING GOOD GOVERNANCE GOVERNANCE PRACTICES GOVERNMENT BUDGET GOVERNMENT BUDGET DEFICIT GOVERNMENT DEBT GOVERNMENT SECURITIES GRACE PERIOD GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES HIGH INFLATION HOLDING HOLDING COMPANIES HOLDINGS HOUSING ILLIQUIDITY IMPORT IMPORT DEMAND IMPORTS INFLATION INFLATION RATE INFLATION RATES INFLATION REPORT INFLATION TARGET INFLATION TARGETING INFLATION TARGETING FRAMEWORK INFLATION TARGETS INTEREST RATE INTEREST RATE ADJUSTMENT INTEREST RATE DIFFERENTIAL INTEREST RATE DIFFERENTIALS INTEREST RATES INTEREST-RATE INTERNATIONAL BANK INVESTING LEGAL ENVIRONMENT LIQUIDITY LIQUIDITY CONDITIONS LIQUIDITY MANAGEMENT LIQUIDITY RISKS LIQUIDITY SUPPORT LOAN MACROECONOMIC ENVIRONMENT MARKET PARTICIPANTS MARKET SHARES MATURITIES MATURITY MATURITY EXTENSION MATURITY MISMATCH MATURITY MISMATCHES MONETARY EXPANSION MONETARY FUND MONETARY POLICY MONEY MARKET MONEY MARKETS MORAL HAZARD MORTGAGES NONPERFORMING LOANS NPL OPERATIONAL RISK POLICY RESPONSE PRICE STABILITY PRICE STABILITY OBJECTIVES PRINCIPAL REPAYMENT PRIVATE BANK PRIVATE BANKS PROFITABILITY PUBLIC BANKS PUBLIC DEBT PUBLIC DEBT INSTRUMENTS PUBLIC DEFICITS RAPID CREDIT EXPANSION REAL APPRECIATION REAL ESTATE LOANS REAL INTEREST REAL INTEREST RATES REAL SECTOR RECESSION RECESSIONS REGULATORY FRAMEWORK REMUNERATION REPO REPO AUCTIONS REPO RATE RESERVE RESERVE ACCUMULATION RESERVE RATIOS RESERVE REQUIREMENTS RESERVES RISK AVERSION RISK MANAGEMENT SAVINGS SAVINGS DEPOSIT SHARE OF CREDITS SHORT-TERM INTEREST RATE SHORT-TERM INTEREST RATES SHORT-TERM RATES SLOWDOWN SOVEREIGN DEBT SPECULATIVE INFLOWS STATE BANKS SUPPLY CONDITIONS SUSTAINABLE GROWTH SWAP SWAP MARKETS SWAPS TARGET GROWTH RATE TAX TAX DEDUCTION TAX HIKES TOTAL CREDIT TOTAL CREDITS TRANSACTION TREASURY TREASURY BONDS UPWARD PRESSURE WEIGHTS WITHDRAWAL WORKING CAPITAL YIELD CURVE YIELD CURVES
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111005142139 http://hdl.handle.net/10986/3598

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Summary:	This brief country case study on Turkey aims to summarize the fundamental developments in the banking sector, which represents almost 90 percent of the financial sector in the country. The brief has two parts. The first covers the 2001 financial crisis and the developments until end of 2007, the year before the global financial crisis of 2008 started. The second part focuses on the macro-prudential policies applied by the Central Bank of the Republic of Turkey in response to the global financial crisis in three phases: (i) full liquidity support after Lehman Brothers' collapse (September 2008), (ii) the exit strategy (April 2010), and (iii) the new policy mix (final quarter of 2010).

The Experience with Macro-Prudential Policies of the Central Bank of the Republic of Turkey in Response to the Global Financial Crisis

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