Effects of economic stability programs applying in developing countries on banking sector and financial crisis

ABSTRACTEFFECTS OF ECONOMIC STABILITY PROGRAMS APPLYING INDEVELOPING COUNTRIES ON BANKING SECTORAND FINANCIAL CRISISSeçkin DOĞANThe banking sector forms the foundation of the financial system in Turkey anddeveloping countries. Unless these institutions, which mediate for savings andenterprises, have to dischange their functions absolutely, or the economy does not workeffectively and economical accretion is influenced negatively.For this reason, not only crisis which is used in the banking sector limits but alsoit spreads over the economy. A crisis which is occured in this system causes reductionof savings and enterprises can not be financed because of jolted confidence in thebanking savings system. Nevertheless sources which were spent bring a big pressure onthe economy because the financial system which has collapsed is reconstructed.From this point of view, by decreasing the risk opportunities in the bankingsector and voiding the policy and its application that could cause instabilities in thebalance structure is great importance for maintaining the economic stability andpreventing the banking crisis.In order to achieve this macroeconomic effects of economic stability programsapplied in Turkey in year 2000 and its effects have been revealed. Liguiditing theweakening opportunities of rise levels in the banking sector, with the interest andexchange rate risks, low of supervision and reconstrancting the macroeconomic balancehave been proven to be the basic reasons for November 2000 and February 2001 crisis.With the conclusion of the analysis, importing this point of view have been reached andstrengthing the banking sector together with the variation of precautions have beenemphisited.