Abstract

http://ssrn.com/abstract=1931706
 
 

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Market Discipline in Turkey Before and after the 2001 Financial Crisis


Levent Bulut


University of Georgia - Department of Economics

Osman Nal


Texas Southern University

November 15, 2009

Review of Middle East Economics and Finance, Vol. 5, No. 1, 2009

Abstract:     
This paper compares the effectiveness of market discipline mechanisms in the banking sector before and after the 2001 financial crisis in Turkey. It employs an empirical model that incorporates the contemporaneous feedback effects between deposits growth rate and the implicit interest rate. Using 3SLS procedure, the results show that market disciplinary forces in Turkey have been effective both before and after the 2001 financial crisis. The findings show that the effect of the implicit interest rate on deposits becomes more sensitive to bank risk fundamentals after the 2001 financial crisis. Depositors, on the other hand, do not change their behavior in the aftermath of the crisis which can be explained by an implicit “too-big-to-fail'' protection at work.

Number of Pages in PDF File: 34

Keywords: market discipline, capital asset ratio, deposit safety nets, too-big-to-fail

JEL Classification: G21, G28, E53

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Date posted: September 21, 2011  

Suggested Citation

Bulut, Levent and Nal, Osman, Market Discipline in Turkey Before and after the 2001 Financial Crisis (November 15, 2009). Review of Middle East Economics and Finance, Vol. 5, No. 1, 2009 . Available at SSRN: http://ssrn.com/abstract=1931706

Contact Information

Levent Bulut (Contact Author)
University of Georgia - Department of Economics ( email )
Brooks Hall
310 Herty Drive
Athens, GA 30602-6269
United States
706-542-3488 (Phone)
Osman Nal
Texas Southern University ( email )
3100 Cleburne Street
Houston, TX 77004
United States
713-313-1375 (Phone)
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