Banking Sector

To complete the scheme of Turkish economic system, a little must be pointed out about the financial structure which covers and supports all the other sectors. Banking, as the fundamental element of this structure, must be separately emphasized because of its broad function in the economy.

The Turkish financial system, comprising various institutions and instruments, is principally founded upon a universal banking system. Banks operate in accordance with international rules and practices, and offer numerous services with their many branches. These services include almost at activities being carried out in money and capital markets.

The Central Bank of the Turkish Republic is at the top of the banking system, being authorized to supervise and control the operations of the various types of banks. Under this supervision, commercial banks engage mainly in activities of collecting deposits and making loans; while investment and development banks operate with the aim of providing financial support to certain sectors of the economy. Each of these types is composed of both state-owned and private banks, together with established or branched foreign banks.

Accelerated by the liberalization movements of the 1980s, the continuous modification and diversification process taking place in the whole economy is widely reflected in the banking sector. Freeing of interest and foreign exchange rates; establishment of the Interbank Money Market for regulation of liquidity; and legal arrangements made to promote the development of the capital market, were some of the reforms recently made. Subsequently banks, in addition to the ordinary banking activities, began to offer services like foreign currency transactions, negotiation of security issues, investment management, personal loans, credit cards, and financial consultation. Modern systems and technology were adopted to facilitate these services, including automatic teller machines. Supplementary institutions were also added to the system, like insurance and leasing companies which share the financial activities with banks, though most are affiliated to them.

With all these operations, Turkish banks today perform the function of accumulating the funds in the economy and treating them in conformity with international principles. Rapid developments related to computerization and automation of the services, further increase this conformity, and the entire financial system is being perpetually enriched to keep up with global standards.