International Financial Crises and the Political Economy of Financial Reforms in Turkey: 1994-2009
Authors: Birgül Şakar
This study1 holds for the formation of international financial crisis and political factors for economic crisis in Turkey, are evaluated in chronological order. The international arena and relevant studies conducted in Turkey work in the literature are assessed. The main purpose of the study is to hold the linkage between the crises and political stability in Turkey in details, and to examine the position of Turkey in this regard. The introduction part follows the literature survey on the models explaining causes and results of the crises, the second part of the study. In the third part, the formations of the world financial crises are studied. The fourth part, financial crisis in Turkey in 1994, 2000, 2001 and 2008 are reviewed and their political reasons are analyzed. In the last part of the study the results and recommendations are held. Political administrations have laid the grounds for an economic crisis in Turkey. In this study, the emergence of an economic crisis in Turkey and the developments after the crisis are chronologically examined and an explanation is offered as to the cause and effect relationship between the political administration and economic equilibrium in the country. Economic crises can be characterized as follows: high prices of consumables, high interest rates, current account deficits, budget deficits, structural defects in government finance, rising inflation and fixed currency applications, rising government debt, declining savings rates and increased dependency on foreign capital stock. Entering into the conditions of crisis during a time when the exchange value of the country-s national currency was rising, speculative finance movements and shrinking of foreign currency reserves happened due to expectations for devaluation and because of foreign investors- resistance to financing national debt, and a financial risk occurs. During the February 2001 crisis and immediately following, devaluation and reduction of value occurred in Turkey-s stock market. While changing over to the system of floating exchange rates in the midst of this crisis, the effects of the crisis on the real economy are discussed in this study. Administered politics include financial reforms, such as the rearrangement of banking systems. These reforms followed with the provision of foreign financial support. There have been winners and losers in the imbalance of income distribution, which has recently become more evident in Turkey-s fragile economy.
Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1080394Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 1385
 P. Krugman (1979), "A model of balance- of- payments crises," Journal of Money, Credit, and Banking, 11 (August), pp. 311-25.
 M. Obstfeld (1996), "Models of Currency Crises With Self-Fulfilling Features," European Economic Review, 40.
 P. Krugman (1997), "Currency crises" http://web.mit.edu/krugman /www/
 B. Eichengreen and M. Bordo (1999), "Is our current international economic environment nusually crisis prone," www.rba.gov.au/ PublicationsAndResearch/Conferences/1999/BordoEichengreen.pdf
 Asl─▒ Demirg├╝├º and Detragiache Enrica (1997), "The determinants of banking crises: evidence from developed and developing countries," IMF Working Papers, 4325, pp. 1-25.
 J. Kregel (2000), "The Brazilian crisis: from inertial inflation to fiscal fragility," Working Paper 294, Levy Institute.
 A. J. Alves, Fernando Ferrari and F. R. Luiz-Paula (1999-2000), "The post Keynesian critique of conventional currency crisis models and Davidson-s proposal to reform the international monetary system," Journal of Post Keynesian Economics, 22 (2), pp. 207-225.
 Marco Rossi (1999), "Financial fragility and economic performance in developing countries," IMF Working Paper 99/66.
 P. Arestis and Glickman, M. (1999), "Financial crisis in South East Asia: dispelling illusion the Minksyan way," Working Paper, No. 22 December, Department of Economics.
 J. Kregel (1998), "Yes, ÔÇÿit- did happen again-a Minsky crisis happened in Asia," Levy Institute: Conference Proceedings: 8th Annual Hyman P. Minsky Conference of Financial Structure (The Fragility of the International Financial System: Options for Policy) Working Papers 234.
 Alejandro L├│pez-Mej├¡a (1999), "Large capital flows: causes, consequences, and policy responses," Finance and Development, September, 36 (3), pp. 28-31.
 D. Hardy and C. Pazarba┼ƒ─▒o─ƒlu, (1998), "Leading indicators of banking crises: was Asia different," IMF Working Paper, 98/11. Say─▒m I┼ƒik - Koray Duman - Adil Korkmaz 66
 Michael Gavin and R. Hausman (1996), "The roots of banking crises: the macroeconomic context," Banking Crises in Latin America, R. Hausman and L. R. Saures (eds.), pp. 27-63.
 G. Kaminsky, S. Lizondo and C. Reinhart (1997), "Leading indicators of currency crises," IMF Staff Papers, 45 (1), pp. 1-48.
 R. Chang and Andres Velasco (1998), "Financial crises in emerging markets: a canonical model," NBER Working Paper Series, 6606.
 J. Sachs and S. Radelet (2002), "The onset of the East Asian financial crisis," Currency Crises (Ed. P. Krugman), NBER, Chicago.
 O. Celasun (1998), "The 1994 currency crisis in Turkey," Policy Research Working Paper No. 1913, April. T├╝rkiye Ekonomisinde Finansal Krizler 65
 Fatih ├ûzatay (1996), "The lessons from the 1994 crisis in Turkey: public debt (mis)management and confidence crisis," Yap─▒ Kredi Economic Review, June, 7 (1), pp. 21-37.
 M. U├ºer, R. Van Rijckeghem and R. Yolalan (1998), "Leading indicators of currency crises: a brief literature survey and an application to Turkey," Yap─▒ Kredi Economic Review, December, 9 (2), pp. 3-23.
 K. Boratav (1994), "Ekonomik özg├╝rl├╝kler, g├╝ven ve reform s├╝reci," ─░ktisat/─░┼ƒletme ve Finans, 9 (100), pp. 22-30.
 E. Uygur (1994), "T├╝rkiye-de ekonomik kriz: olu┼ƒumu, seyri, gelece─ƒi," ─░ktisat/─░┼ƒletme ve Finans, 9 (100), pp. 42-54.
 E. Yeldan (1994), "Kamu finans krizinin ard─▒ndaki etkenlerin böl├╝┼ƒ├╝m göstergeleri a├º─▒s─▒ndan irdelenmesi," ─░ktisat/─░┼ƒletme ve Finans, 9 (100), pp. 56-73.
 Y. Aky├╝z and K. Boratav (2002), "T├╝rkiye-de finansal krizin olu┼ƒumu," ─░ktisat/ ─░┼ƒletme ve Finans, pp. 15-45.
 Erin├º Yeldan (2002), "On the IMF-directed disinflation program in Turkey: a program for stabilization and austerity or a recipe for impoverishment and financial chaos," N. Balkan (ed.) The Ravages of Neo-Liberalism: Economy, Society and Gender in Turkey, New York: Nova Science Publication.
 A. Ertu─ƒrul and F. Sel├ºuk (2002), "Turkish economy: 1980-2001," Inflation and Disinflation in Turkey (Eds.: A. Kibrit├ºio─ƒlu, L. Rittenberg ve F. Sel├ºuk), Ashgate Publishing Limited, , pp. 13-40.
 E. Uygur (2001), "Krizden krize T├╝rkiye: 2000 kas─▒m ve 2001 ┼ƒubat krizleri," T├╝rkiye Ekonomi Kurumu, Discussion, April, pp. 1-36.
 Fatih ├ûzatay and G├╝ven Sak (2002), "The 2000-2001 financial crisis in Turkey," Paper presented for Brookings Trade Forum 2002.
 E. Alper (2001), "The Turkish liquidity crisis of 2000: what went wrong," Russian and East European Finance and Trade, 37 (6), pp. 51- 71.
 S. I┼ƒ─▒k (2004), "Post Keynesyen finansal kr─▒lganl─▒k yakla┼ƒ─▒m─▒n─▒n T├╝rkiye-de finansal krizlere (1990-2001) uygulanmas─▒," ─░ktisat/i┼ƒletme ve Finans, 218 (May), pp. 51-77.
 G. Karabulut (2002), Geli┼ƒmekte Olan ├£lkelerde Finansal Krizlerin Nedenleri, Der Yay─▒nlar─▒, Pub. No: 328, Istanbul.
 E. P. Davis (1992), Debt, Financial Fragility, and Sistemic Risk, Clarendon Press, Oxford.
 F. Mishkin (2009), "Is Monetary Policy Effective During Financial Crises?" NBER Working Papers 14678.
 A. C. Schwartz (1986), "Real and pseudo-financial crises," Financial Crises and The World Banking System, (Eds.: F. Capie and G. E. Wood), MacMillan.
 S├╝bidey Togan (2001), "Kas─▒m ve ┼×ubat krizleri ├╝zerine," Yeni T├╝rkiye, 7 (41), pp. 511-517.
. Paul Krugman "What's New About The New Economic Geography Oxordf Review Economic Policy" 1998; 14:7-17
 F.. Mishkin ( 2008), "Globalization, Macroeconomic Performance, and Monetary Policy," NBER Working Papers 13948.
 P. Krugman ( 2008), "Depression Economics Returns," New York Times, November 14, 2008.