The role of financial policies in preventing 2008 global crisis: The case of Turkey

As a result of slump of the real-estate sector of the USA in the last quarter of 2007, financial crisis began and in 2008, this crisis penetrated several countries throughout the world in a short term. The global crisis and expansionary policies against the crisis increased the budget gap and debt level of several developed countries. Therefore, sustainability of public finance was imperiled and the issues as decreasing budget gap, increasing supervision and disciplining public finance have begun to be placed higher importance. In this frame, implementation of financial policies as well as ensuring consistency in budget incomes and regulating public expenses has also become a necessity. As a result of the facts, the financial policy precautions of Turkey during the crisis were considered to eliminate the uncertainty in markets, intended to compensate the decreasing private sector investments and shrinking demand in household expenses and some arrangements were made in public incomes and expenses. This study was conducted for determining the factors effective for Turkey to overcome the global crisis and revealing the role of financial policies. Accordingly, the methods for managing global crisis in the world and Turkey by using financial policies were analyzed. Considering the macroeconomic indicators, as a result of the implemented precautions and policies, it was concluded that Turkey achieved the pre-crisis level after its struggle with the global crisis through sound and proper use of financial policy practices. In the following years, growth rate has gone up more and more. By this way, the role of financial policies in preventing crisis has been recognized once again through the global crisis.