Corporate governance and the effects on Turkish banking sector

Technological developments, globalization and financial liberalization accelerate the capital circulation in the world. Currently, an investor living far end of the world can make financial, commercial and industrial investments in a geographically distant country. However, that economic dimension of globalization has created some requirements for investors, society, workers, administrators and public authority. These requirements generally involve more information and transparency regarding the companies to be invested, justice between investors, accountability for administrators towards investors and responsibility for society and public authority. Those requirements increasing with the economic dimension of globalization and ensuring the security of capital have led many international organizations, especially OECD, to make legal regulations. As a result, countries were obliged to make structural changes appropriate for the international regulations in order to attract foreign capital they need, and therefore, aimed to increase their competition advantages against other countries. Today, this process enabling to reach the concept used as corporate governance continues in developed and developing countries. As mentioned, these concepts emerged in order to ensure the security of capital is not stable; they change and develop in parallel with economic and social developments. Corporate Governance Principles prepared by OECD for the first time in the world were created by Capital Markets Board in Turkey. Afterwards, legal regulations covering financial, commercial and industrial areas were made due to the need for Corporate Governance Principles exceeding public companies which are the limits of the authority of CMB. The present study examines the concept, dimensions and practices of Corporate Management. In addition, the study tries to analyze the effect of corporate management on Turkish banking system through examining the relationship between the concepts of corporate management and banking system which is important for gathering the ones in supply and demand for fund and realizing functions as receipt and payment. To that end, the study aims to measure the relationship between the measurable indicators regarding the ownership structure, control structure and management structure which are the three main structures corporate management is based on, and some proportions showing financial performances of banks. Therefore, the study examines the presence of relationship between financial performances in banks and corporate management practices which gradually become widespread in Turkey. The results were interpreted using EViews software. Keywords: Corporate Governance, Banking Sector, Capital Ownership Structure, Control Structure, Management Structure, Financial Performance