The Impact of Foreign Banks' Operations on Credit Growth of the Banking Sector in Turkey

This study attempts to analyze the impact of foreign banks on the Turkish banking sector. It is generally accepted that foreign banks have a positive effect on the host countries financial sector in terms of increasing credit to the private sector and improving efficiency in the banking sector through competition. These outcomes however, may vary from country to country. This research examines whether the growing existence of foreign banks in Turkey had a significant impact on credit supply to the private sector. The empirical results showed that there is a positive relationship between the foreign banks existence in Turkey and the credit supply to the private sector. Keywords: Foreign banks, banking sector, credit supply, private sector, Turkey.