Banking in Türkiye: History, evaluation, and role in the financial system

Abstract

In Turkey, the banking industry produces the most significant and biggest share of the Turkish Finance System. Foreigners made a high number of banking transactions in Turkey during the early years of the Republic. The capital structure of the Turkish banking system held by foreigners has always been a source of debate,

and as a result, attempts to promote national industry and banking have been prioritized throughout the Republican Era. The Central Bank was established in 1931,

followed by several Turkish-owned banks, and it is still in operation today. Despite the effects of the 1929 Great Depression, World War II, changes in the world’s monetary system, the establishment of international financial and economic unions,

oil shocks, and frequently encountered financial crises, the most notable development process of Turkish banking dates back to the Republican Era. During this

period, banks were founded to give state assistance for any industry or to get financial facilities for major industrial groupings to carry out their activities. Following

the 1980s, when globalization accelerated and financial deregulation occurred, the

banking industry developed significantly and has become one of the most important industrial businesses supporting Turkey’s economic development. During this

period, the country’s economic policies have been significantly altered, and a free market economy has been introduced. Following the financial crisis that hit Turkey in 2001, critical banking reforms were implemented. Such arrangements have bolstered the Turkish economy and financial system, as well as aided the progress of Turkey’s integration into global markets. Following a general overview of banking history in the world, this study makes specific references to developments in Turkey in light of modern banking history, with explanations on today’s process for a complicated, supranationalized, and technology-focused structure, the crisis experienced, and the reforms implemented.