The place of public banks in the economic development process in Turkey

The purpose of this work is to examine the position of public banks in the economic development policies applied in Turkey during 1923-1986 period. To analyze of the role of public banks, monthly and quarterly statistical bulletins of CBRT , the data of banks' publications and term-end balances of the Turkish Banking Association were used in the study .The newly formed republic did not deliver a financial and fiscal structure that could carry out the development function as a consequence of the changing state structure.The devastating effect of the world crisis has presented the semi-liberal policies applied in the 1920s and the private-sector based economic development could not be sustained by the weak local banking and foreign capital oriented banking system. In the 1930s, industrialization wanted to be realized with public banks in search of economic development policies. Public banks, which were established as specialist banks with the initiation of state politics, were decisive in the financing of investments, in the realization of investments and in the development of saving habits. During the Second World War, when the application of state politics was interrupted and production fell, public banks financed their defense spending and produced the requirements of the army.In the post-war agriculture-based growth model, the state-owned banks, which have been decisive in the modernization of agriculture, supported the development of the private sector by ensuring large investments in the import-substitution industrialization strategy implemented since 1954.By 1980s , public banks, which were affected by the desire to reduce the share of the public sector in liberal policies, continued to be in a critical position in the banking system and in the economic development process.Public banks, set up as the result of the pursuance of economic growth policies and the private sector were inadequate, have contributed to the development of the banking system, the realization of investments, the financing of the private sector, the modernization of agriculture, the growth of private banking and the creation of the bourgeoisie.