Navigating the Turkish Banking and Finance System
We will be covering the Turkish System in Banking and Finance, to begin with let’s look at the definition and what they mean. Every country has its own system, and every country strives to have the best system. However, many people lack the detailed information on how the Banking and Finance system works.
There are five different types of banks: central banks, business and commercial banks, deposit banks, agricultural and industrial banks, and investment and development banks. Banks are financial institutions that operate within the confines of bank law and engage in activities like efficient loan and money evaluation.
Over the past 20 years, Turkey’s economy has grown at an average annual GDP growth rate of 5.4 percent. The increase in demand for financial products and services brought on by this growth has been met by the Turkish banking system.
The Turkish banking system is robust and resilient as a result of a number of factors, including.
- Significant structural and regulatory changes were put into place in the early 2000s.
- A significant amount of foreign capital has been drawn to the banking sector as a result of high investor confidence.
- Effective risk-management practices.
These elements have helped to make the Turkish banking system’s capital structure strong, its liquidity high, and its financial indicators trustworthy. The system has also been financially successful, with earnings increasing at a compound annual growth rate of 28% between 2002 and 2022.
Despite its benefits, there is still room for improvement in the Turkish banking system. The system is underpenetrated, with loans accounting for only 51% of GDP and deposits for 59%.
The Turkish banking sector is making investments in technology and fintech to address the challenges of financial inclusion and to meet the changing needs of consumers. The sector is also committed to sustainable finance and working to reduce its carbon footprint.
An important factor in Turkey’s economic expansion is the country’s banking system. The system is robust and in good shape, and it will be able to sustain future economic growth.
The foundation of Turkish law governing banking and finance is the establishment of the Banking Regulation and Supervision Agency (BDDK), which acts as the principal regulatory body in charge of regulating and overseeing the banking and financial services sector. Aside from having the authority to grant and revoke banking licenses, approve mergers and acquisitions, and impose sanctions on banks that violate the law or fail to comply with regulatory requirements, the BDDK is endowed with a wide range of powers. Through its regulatory oversight, the BDDK ensures the stability, integrity, and transparency of the Turkish banking system.
Why do you need a Lawyer?
In the era we currently live in, the banking and financial industries have grown incredibly quickly. This led to the creation of new industry requirements. Currently, those with the title of banking and finance lawyers deal with the demands that this industry generates. In addition to businesses, customers who have problems with banks can get specialised services. Having a lawyer will pave the way for many things such as:
- Providing legal assistance when drafting agreements for personal or business loans.
- Ensuring that the legality of the collaterals is upheld.
- Regulating commercial practices like pledges and mortgages using legal justifications.
- Providing letters of bank assurance.
Additionally, at Serka Law Firm our specialists lawyers provide services in many other areas. Contacting us will allow you to guarantee that all of your legal proceedings will be handled financially in a way that upholds your rights.
Turkey has a total of 57 banks, out of which 288 are categorized as foreign banks. The banking sector in Turkey is overseen and regulated by the Banking Regulation and Supervision Agency (BDDK). With a strong capital adequacy ratio of 18%, the Turkish banking system surpasses the regulatory requirements. Moreover, it exhibits a high level of liquidity, as indicated by a liquidity coverage ratio of 158%.
Over the years, the Turkish banking system has proven to be profitable, with an impressive compound annual growth rate (CAGR) of 28% in profits between 2002 and 2022. However, despite its success, the banking system in Turkey remains relatively underpenetrated, with loans accounting for only 51% and deposits representing 59% of the country’s GDP.
One significant challenge lies in the fact that 26% of adults in Turkey do not have a bank account, a percentage considerably higher than in other developed nations. To address this issue and cater to evolving consumer needs, the Turkish banking sector is actively investing in technology and fintech solutions. By embracing these advancements, they aim to enhance financial inclusion and overcome associated obstacles.
Furthermore, the Turkish banking sector demonstrates a commitment to sustainable finance. Recognizing the importance of environmental responsibility, banks are undertaking measures to reduce their carbon footprint and contribute to a more sustainable future.