Foreign Entry in Turkey's Banking Sector, 1980-97
Despite high and volatile inflation, a record number of foreign and local banks entered Turkey's banking sector after the country relaxed rules about bank entry, and generally eliminated controls on interest rates, and financial intermediation in 1980. The country's financial integration w...
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| Format: | Policy Research Working Paper |
| Language: | en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://hdl.handle.net/10986/21295 |
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okr-10986-21295 |
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okr-10986-212952021-04-23T14:04:01Z Foreign Entry in Turkey's Banking Sector, 1980-97 Denizer, Cevdet accounting accounts balance sheets bank assets bank branches bank capital Bank lending bank management bank performance banking sector banking system banks borrowing capital adequacy capital flows Capital inflows Central Bank commercial banks corporate finance credit officers deposit insurance deposit insurance coverage deposits depreciation development banks economic growth electronic banking employment financial assets financial deepening financial integration financial intermediation financial liberalization financial markets financial performance financial services fiscal deficits foreign banks Foreign entry foreign exchange income statements inflation interest income interest margin interest rates legal infrastructure liquid assets loan loss provisions management information systems maturity net interest margin net margin new entrants operating costs operating expenses overhead costs Private banks privatization profitability public banks resource allocation retail banking return on assets return on equity securities small banks state banks structural adjustment transaction costs Uruguay Round Banking systems Inflation rates Foreign banks Banking regulations Interest rates Financial intermediation Capital account Capital inflows External trade Financial liberalization Net operational costs Asset returns Commercial banks Competitiveness Credit analysis Marketing management Human capital Despite high and volatile inflation, a record number of foreign and local banks entered Turkey's banking sector after the country relaxed rules about bank entry, and generally eliminated controls on interest rates, and financial intermediation in 1980. The country's financial integration with the rest of the world took a big step forward with the opening up of the capital account in 1989. Capital inflows rose significantly, and the financial system became increasingly linked with external markets. The author examines one dimension of liberalization: the impact of foreign banks entering the financial sector. Between 1980 and the end of 1997, 17 foreign banks, and a number of new local banks entered the sector. The author investigates how these banks' entry into the sector affected performance, based on three measures: net interest margin, overhead expenses, and return on assets (all expressed as a percentage of total assets). He finds that: 1) Foreign bank ownership is related to all three performance measures. 2) Foreign bank entry reduced the overhead expenses of domestic commercial banks, strengthening profits. 3) Despite their small scale operations, foreign banks entering the sector had a strong effect on competition. But the market could use more competition. 4) There are strong indications that foreign banks had a positive impact on financial, and operational planning, credit analysis and marketing, and human capital. 2015-01-20T16:54:21Z 2015-01-20T16:54:21Z 2000-10 http://hdl.handle.net/10986/21295 en_US Policy Research Working Paper;No. 2462 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Europe and Central Asia Turkey |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
accounting accounts balance sheets bank assets bank branches bank capital Bank lending bank management bank performance banking sector banking system banks borrowing capital adequacy capital flows Capital inflows Central Bank commercial banks corporate finance credit officers deposit insurance deposit insurance coverage deposits depreciation development banks economic growth electronic banking employment financial assets financial deepening financial integration financial intermediation financial liberalization financial markets financial performance financial services fiscal deficits foreign banks Foreign entry foreign exchange income statements inflation interest income interest margin interest rates legal infrastructure liquid assets loan loss provisions management information systems maturity net interest margin net margin new entrants operating costs operating expenses overhead costs Private banks privatization profitability public banks resource allocation retail banking return on assets return on equity securities small banks state banks structural adjustment transaction costs Uruguay Round Banking systems Inflation rates Foreign banks Banking regulations Interest rates Financial intermediation Capital account Capital inflows External trade Financial liberalization Net operational costs Asset returns Commercial banks Competitiveness Credit analysis Marketing management Human capital |
| spellingShingle |
accounting accounts balance sheets bank assets bank branches bank capital Bank lending bank management bank performance banking sector banking system banks borrowing capital adequacy capital flows Capital inflows Central Bank commercial banks corporate finance credit officers deposit insurance deposit insurance coverage deposits depreciation development banks economic growth electronic banking employment financial assets financial deepening financial integration financial intermediation financial liberalization financial markets financial performance financial services fiscal deficits foreign banks Foreign entry foreign exchange income statements inflation interest income interest margin interest rates legal infrastructure liquid assets loan loss provisions management information systems maturity net interest margin net margin new entrants operating costs operating expenses overhead costs Private banks privatization profitability public banks resource allocation retail banking return on assets return on equity securities small banks state banks structural adjustment transaction costs Uruguay Round Banking systems Inflation rates Foreign banks Banking regulations Interest rates Financial intermediation Capital account Capital inflows External trade Financial liberalization Net operational costs Asset returns Commercial banks Competitiveness Credit analysis Marketing management Human capital Denizer, Cevdet Foreign Entry in Turkey's Banking Sector, 1980-97 |
| geographic_facet |
Europe and Central Asia Turkey |
| relation |
Policy Research Working Paper;No. 2462 |
| description |
Despite high and volatile inflation, a record number of foreign and local banks entered Turkey's banking sector after the country relaxed rules about bank entry, and generally eliminated controls on interest rates, and financial intermediation in 1980. The country's financial integration with the rest of the world took a big step forward with the opening up of the capital account in 1989. Capital inflows rose significantly, and the financial system became increasingly linked with external markets. The author examines one dimension of liberalization: the impact of foreign banks entering the financial sector. Between 1980 and the end of 1997, 17 foreign banks, and a number of new local banks entered the sector. The author investigates how these banks' entry into the sector affected performance, based on three measures: net interest margin, overhead expenses, and return on assets (all expressed as a percentage of total assets). He finds that: 1) Foreign bank ownership is related to all three performance measures. 2) Foreign bank entry reduced the overhead expenses of domestic commercial banks, strengthening profits. 3) Despite their small scale operations, foreign banks entering the sector had a strong effect on competition. But the market could use more competition. 4) There are strong indications that foreign banks had a positive impact on financial, and operational planning, credit analysis and marketing, and human capital. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Denizer, Cevdet |
| author_facet |
Denizer, Cevdet |
| author_sort |
Denizer, Cevdet |
| title |
Foreign Entry in Turkey's Banking Sector, 1980-97 |
| title_short |
Foreign Entry in Turkey's Banking Sector, 1980-97 |
| title_full |
Foreign Entry in Turkey's Banking Sector, 1980-97 |
| title_fullStr |
Foreign Entry in Turkey's Banking Sector, 1980-97 |
| title_full_unstemmed |
Foreign Entry in Turkey's Banking Sector, 1980-97 |
| title_sort |
foreign entry in turkey's banking sector, 1980-97 |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://hdl.handle.net/10986/21295 |
| _version_ |
1764447855912681472 |