(Effects of Restructuring Efforts to the Development of Banking Sector: Turkey Examination)

Abstract

Purpose – Turkey started a banking sector restructuring program after severe banking crises seen 2000 and 2001 and banking sector was subjected to restructuring. The global financial crisis seen in 2008 created a new difficult era for Turkey and new measures were also taken in this process. All measures taken have positive or negative effects on the sector. For this reason, this study is prepared in order to address the effects of the structuring efforts carried out on the development of the Turkish Banking Sector. Design/methodology/approach – Data in Turkey for the period of 2003-2019/10 regarding macro indicators (total assets, loans, deposits, net income, and concentration components), and financial stability indicators (profitability, capital adequacy ratio (CAR), net foreign currency position, liquidity, nonperforming loans components) are analyzed with the descriptive statistic method. Findings – According to the results of the examination, it is determined that the structuring efforts carried out and measures taken have a positive effect generally on the development of the Turkish banking sector. Macro and financial stability indicators examined have experienced remarkable development for the period of in 2003-2019/10. However, dollarization has been observed in deposits which are one of the macro indicators. On the other hand, net foreign currency position (YPNGP)/legal equity standard ratio has been quite above the legal limit of 20%; and nonperforming loans reached 5.4% which are both the financial stability indicators. Discussion – Although a significant development has been in macro and financial stability indicators, there has been a dollarization trend in deposits and there is an increase in nonperforming loans in recent times. This situation creates new difficulties for the sector. For this reason, it has become compulsory to start new and comprehensive restructuring program intended for the sector. A comprehensive restructuring program for the sector should be carried out rapidly and decisively before dollarization in deposits and nonperforming loans reach an unmanageable level.