Financial liberalization in the macro - economic variables and the effect on the example of Turkey

The idea of financial liberalization which has historical theoretical roots began to spread in developing countries as a result of the collapse of the BrettonWoods system in early 1970s. During 1980s, this neo-liberal process compeletely settled in developing countries on the basis of Mckinnon-Shaw hypothesis.Financial liberalization practices brought some positive results to some countries, while many other countries suffered severe crises with very high economic and social costs. Financial liberalization practices emerged in Turkey with the reform package implemented on 24th January 1980. This process led to many structural reforms in the Turkish economy. In accordance with the law no. 32 in 1989, external financial liberalization was assimilated in Turkey. Since then, like many other developing economies, the Turkish economy faced many instabilities and crises. The purpose of our study is to analyze how financial liberalization practices came about and how it spread around the world. Another purpose of this study is to analyze the impacts of the financial liberalization over the macroeconomic variables in Turkey after 1980s. Keywords: Liberalization, Financial Liberalization, Turkish Economy and Macroeconomic Variables.