The effect of the COVID-19 pandemic crisis on Turkish banking activities and forecasts on the future of the industry

Covid-19, a type of epidemic that has not been seen in the world for many years, and the pandemic crisis caused by it, has greatly affected human life both socially and economically since its emergence. Banks, which have managed to learn many lessons from past crises and have made their systems more resilient to crises, have managed to emerge unscathed from the Covid-19 pandemic crisis, which has had a large-scale impact on the global financial system. The crisis brought new reflexes to the banking system and did not create a significant negative impact on bank performance during and after the crisis. Although the Turkish Banking Sector is accustomed to economic crises recurring almost every decade, the first time such a pandemic was encountered and the unpredictability of the effects of the crisis on both the global and local economy and financial circles led to frightening scenarios that the system would collapse. At this point, while each country implemented different measures against the crisis, the economies of G-20 countries contracted by approximately 3.3% in the process, while Turkey managed to be one of the few countries, along with China, to maintain its growth momentum with a growth rate of 1.8% (SPK, 2020). As a result of the sudden contraction in global trade due to the pandemic, factories had to slow down or stop their activities for certain periods of time depending on their business lines, and the shrinkage in service sectors such as tourism, health, education and many related sub-business lines caused deterioration in many macroeconomic indicators, especially employment. The harsh measures taken in the face of this unforeseen situation led to a sharp decline in commercial activity, and companies and employees were faced with the risk of defaulting and defaulting on their financial obligations. This environment forced financial institutions and organizations, including banks, to rapidly renew their business models and strategies, adapt quickly to new conditions, and gain the ability to manage new risks (KPMG, 2020). Central banks have generally pursued parallel policies throughout the crisis and used instruments such as liquidity support, asset purchases, swap lines, policy rate cuts, credit facilities, term financing facilities, foreign exchange interventions, reserve requirement reductions and capital requirement reductions to mitigate the effects of the crisis. With these instruments, a rapid reaction was shown against the crisis and the pressure of Covid-19 on the markets was tried to be reduced. However, the second wave of the pandemic increased the deterioration in macroeconomic indicators, leading to the idea that the effects of the measures taken in the first phase were limited (Şahin, 2021: 69-80). Banks tried to overcome this period of reduced human activity by giving more importance to digitalization and increasing the use of alternative distribution channels. Therefore, the Covid-19 crisis also helped banks to better understand the importance of digitalization and to gain new perspectives to improve their technologies. Considering all these effects, it is thought that the changes experienced by the Turkish Banking Sector due to the process and the measures taken against these changes should be better understood. For this reason, it is evaluated how the Turkish Banking Sector reacted to the Covid-19 pandemic crisis and the effects of the pandemic on the financial structure of the Turkish Banking Sector are analyzed in numerical terms, and it is tried to determine to what extent the policies implemented protect the financial structures.