Financial liberalization,financial crises and the case of Turkey

Developed countries' economies has started to liberalize their capital movements by globalization wave as well as developing countries' has forced to take decision about financial liberalization especially after the 1980's. Liberalization of capital markets has started to be independent exactly without controlling and liberalization has became important gradually. So this makes that countries could not carry out their economic policies independently as well as countries faced with economic crises even when they were rescued by international funds. Financial liberalization of Turkey's economy's has laid the foundation with 24th January 1980 decisions. New ones added each year to financial reforms and in 1989 after stepping into external financial liberalization with the Dec. No. 32 developing country's economy has started to struggle many financial instability problems and financial crises. The purpose of this study to analyze the impact of financial liberalization policies, which is implemented in Turkish economy after 1980 on economic growth. In the first chapter, theoretical approches to financial liberalization and types of financial liberalization has been focused on. In the second chapter the exam with the financial liberalization of Turkey's economy is evaluated. Here especially the reforms of financial liberalization and important financial crises which took place after reforms has been focused on. In the last part, the relationship between level of financial liberalization and economic growth has been modelled with Vector Autoregression method and the achieved results has been analyzed. As the result of the econometric analysis; a negative relationship between financial liberalization and economic growth has been detected. The achieved results have shown parallels in this sense with many studies in the literature. Key Words: Financial Liberalization, Financial Crises, Turkish Economy, Economic Growth.