The development of the Turkish banking sector in the post 1980 period: The impact of inflation on bank's balance sheets

After the economic crises of 2000 and 2001, a new economic program was introduced to revise macroeconomic breakdown Turkey has been going through for a long period of time. Implementation of the program with stability lasted with lowering both high inflation rates and public sector borrowing requirement. Banking sector was one of the affected most under stabilization efforts. The purpose of this study is to understand the changes that the banking sector balance sheets before and after the program. In this study, it was seen that during 1980?s Turkish Banking Sector had accomplished a new shape with the effect of liberal economic integration, during the 1990?s the sector grew with structural problems caused by economic crises and chaotic macroeconomic environment and after the year 2001 all structural problems within the sector was solved with the sufficient implementation of the economic program. After the success achieved with the program and moving along membership process to the European Union there was also noticeable direct foreign investment attention observed to the Turkish Banking Sector. Lastly, an econometric analysis about the determinants of credit volume in Turkish market was introduced. And the main result of the econometric analysis indicates that credit volume was mainly affected by the prior credit volumes and especially exchange rates. It was surprising to see that real interest rates were not as significant.