Basel capital standards and their effects on Turkish banking sector

ABSTRACT Master's Thesis Basel Capital Standards And Their Effects On Turkish Banking Sector Cebrail GÜZEL Adiyaman University Graduate School of Social Sciences Department of Business Administration Program March, 2019 Stagflation crisis that was erupted in 1973 in global economies, reducing obstacles of circulation of the capital in international markets, technological developments and advancements, the need for diversification of financial products and services and tendency of the banks to deal with new business fields that are more risky than conventional banking exposed banking industry to the new type of risks. These developments lead the banking sector to take measures against fundamentals risk components such as credit, market, operational and liquidity risks, as well as other risk factors arising from innovations. In this context, it was necessary to supervise international financial movements, to subject the banking sector to new regulations and to eliminate the conjectural differences between the countries. In order to implement these changes, the Basel Committee on Banking Supervision was established under the Bank for International Settlements (BIS). The Basel Committee, which was established in order to minimize the risks by setting a standard in the international banking system, published the Basel I Capital Accord in 1988 and made it necessary for the banks of the member states to provide a number of criteria regarding the capital adequacy that represents great importance for the banking sector. The Basel Committee published the Basel II Capital Standards Consensus in 2004, setting new benchmarks for capital adequacy, taking into account developments in financial markets. Particularly after the financial crisis that was emerged 2008, it was observed that Basel II was unable to detect manipulative practices to reflect high-risk-bearing portfolios as if they had lower risk degree through the various ways and calculation of the capital adequacy based on these techniques have revealed the need to publish Basel III capital agreement and in 2010 Basel III capital agreement was published. Basel Committee decisions that have impact on our country's banking industry because of being a member, provided several new changes to force our banks to meet capital adequacy and risk management issues and comply with the criteria related to these topics and achieving standards. In this study, the Basel Capital Accords, which were published by the Basel Committee of which our country is a member, are presented and the obligations and innovations brought by these accords were examined via the a sample that consist of a banks. Keywords: Banks, Capital, Basel, Capital Accord