Causes, Effects and Solutions of Banking Crises: The Case of Turkey

• Main Authors: Filiz Yetiz, Cevher Özden
• Format: Article
• Language: English
• Published: Cukurova University 2017-12-01
• Series: Çukurova Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi
• Subjects: Banking sector; banking crises; cost of crisis
• Online Access: http://dergipark.gov.tr/cuiibfd/issue/34827/387707?publisher=cu

Baking crises are caused by the loss of solvency in banking system. The underlying factors can be attributed to banks inability to carry out their repayment obligations due to certain factors like liquidity shortage, capital shortage and loss of all capitals of banks. Crises in banking sector which performs crucial roles both in financial markets and reel sector result in failure of funds transfer, and this directly affects financial sector. The reasons and results of banking crises observed in distinct countries substantially differ from one another. Banking crises in 1994, 2000 and 2001, 2008 had serious negative effects on banking sector in Turkey. In this study, the causes and effects of banking crises and their repercussions on Turkish banking sector are discussed, and policies are recommended to prevent crises.