Financial instability hypothesis and economic policy: Turkey example

First of all, this descriptive study emphasizes the financial instability hypothesis, financial fragility and risk. After examining the conditions and causes of financial instability, the evolution of conjuncture theories and cyclical fluctuations are categorized. Then, the financial crisis theories and the conditions generated the primary reason of financial instability are examined in details.In the second chapter, the financial instability hypothesis and economic policies are mentioned.In order to resolve instability in economic policies, a comprehensive reform program must be drawn up, including major government, employment and industrial policies, and finally regulatory arrangements for the financial system.The study examines the relation between competition and stability and analyzes the adverse effects created by competition. The positive and negative sides of the Tobi tax, which is the solution of the financial instability crises, are emphasized. Finally, the validity of the financial instability hypothesis in Turkey is taken as for 1970-2015. It's inferred that the values espoused in Minsky's hypothesis are valid for the Turkish economy as well.