The Role of Foreign Banks in The Turkish Banking System After 1980 and their Effects on The Financial Performance of the Sector

Abstract

It can be stated that for the last quarter century, foreign capital banks have become the essential actors of the global financial markets. Especially, in developing countries, the share of foreign capital banks has reached more than half of the banking sector. Similarly in Turkish economy, foreign capital inflow has increased sharply especially for the last two decades and the ownership status of most of the national private banks has changed by mergers and acquisitions. In addition to that, there is also an increase in the number of new foreign banks which were established and started to operate via getting license from Banking Regulation and Supervision Agency (BRSA) for the last ten years. The aim of this study is to search the effects of foreign capital inflow into Turkish banking sector after 1980s. For this reason in the first place, a general information has bee given about the economic policies and the change in the financial system in Turkey since 1980. Following liberalization policies, intensive foreign capital inflows to the country and its effects on the system and the course of the transformation of the banking sector in the last decades have been evaluated. Also, a variety of performance measurements have been examined during this study. State-owned commercial banks, privately-owned commercial banks and the banks owned by foreign capital have been taken in the scope of this study and the selected ratios/indicators of the relevant banks have been compared with the sector averages. The observations and comparisons have been made mainly on a period of last ten years, between 2009-2019. While the reasons that attract multinational companies and foreign capital banks to the Turkish economy and the financial effects of the increase in the number of foreign capital banks in the sector are discussed, the performances of foreign banks are examined by comparing them with the performances of other public and private banks.