Global Financial Crisis and Its Ramifications on Capital Markets

The history of financial crises entails numerous successive cases reshaping global economies. Limited scale and scope of individual financial crises has turned into regional after the deregulation process of 1970s. Tequila Crisis, Asian Flu, Russian Crisis, Dotcom Crash and the others have similarities and differences but they were all regional though the Global Financial Crisis has far-reaching effects due to the globalized economic and financial system of today. On one side, in an effort to find a panacea to economic problems, developed economies have made several attempts such as bail-outs, quantitative easing programs, tapering, low or negative interest rates and called the new circumstances as “new normal”. On the other side, many emerging economies are still in a competition among themselves to decouple from their peers positively, while desperately hoping to hear for a delay of a possible hike in US Federal Reserve Bank interest rates. In such an environment, Turkey still gives a promising impression within the league of emerging economies due to her culture of crisis management coming from the past. Turkey has become highly experienced in economic and financial crises since the economy witnessed economic and financial crises successively, especially after the liberalization of capital flows in 1989. With the experience of major crises in years 1994 and 2001, banking sector is restructured from its ashes and became the major strength of the economy. While harmonizing current domestic banking rules with Basel criterion, capital buffer is still the most powerful vehicle in the hands of the banking system. Turkish banking sector announces high profits on the contrary of many European Union countries. But the question arises whether Turkish Banking sector keeps growing at the expense of the real sector growth