Financial crises and the case of Turkey: 2000-2001 financial crises experienced in Turkish financial sector

140 ABSTRACT Financial crisis possess a critical role both in the theory and empirical studies in the economic literature. Within this field, many issues are still under discussion and every new crisis brings out new subjects to be discussed. The aim of this study is to examine the explanatory capacity of the economic literature for financial crisis within the light of the facts that were experienced in Turkey's November 2000 & February 2001 crisis and analyze the effects of stabilization programmes during the evolution of financial crisis. Therefore, in the study the concept of financial crisis, types, roots, financial indicators and the models developed for explaining the financial crisis are examined in detail and as an application, financial crisis in Turkey are analyzed within those data. Accordingly, "moral hazard" risk, which is accepted as one of the types of the third generation crisis models, has an important role in the evolution and explanation of the November 2000 & February 2001 financial crisis in Turkey. These models emphasize that microeconomic divergences -implicit deposit insurance and government guaranties- and a financial system which was not regulated correctly after the financial liberalization create a moral hazard and over-borrowing in the economy and cause great financial crisis. Within those explanations, financial sector in Turkey progress according to the concept of "asymmetric information" in finance literature.