Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey

Bogazici University ISS/EC Working Paper No. 06-06

40 Pages Posted: 5 Nov 2007

See all articles by Ahmet Faruk Aysan

Ahmet Faruk Aysan

Bogazici University

Huseyin Al

University of Illinois at Urbana-Champaign

Date Written: 2006

Abstract

Recent financial crises highlight weaknesses in financial markets and the need for regulatory and supervisory bodies (RSB) to improve the stability of financial markets. Currently, international institutions like the IMF and the World Bank place the independent RSB among their principle policy recommendations to developing countries. This paper acknowledges the importance of independent RSB for the proper functioning of financial markets. However, this paper also points out the preconditions to establish independent RSB. Unless certain prerequisites are satisfied, policy recommendations to construct an independent RSB are doomed to fail. The recent Turkish experience is provided as a case study to elucidate this conclusion. This paper first presents the arguments for independent RSB and the policy recommendations in institution building for stronger financial system. Then, the background of Turkish experience for independent RSB is provided. Finally, we analyze the primary reasons for the deficient performance of Turkish RSB over the last five years in an attempt to provide actual lessons for the future institutional reforms.

Keywords: Regulation, Supervison, Financial Markets, Banking, Institutional Building, Reform, IMF, The World Bank

JEL Classification: F21, G21, O19

Suggested Citation

Aysan, Ahmet Faruk and Al, Huseyin, Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey (2006). Bogazici University ISS/EC Working Paper No. 06-06, Available at SSRN: https://ssrn.com/abstract=1025514 or http://dx.doi.org/10.2139/ssrn.1025514

Ahmet Faruk Aysan (Contact Author)

Bogazici University ( email )

Bebek, İstanbul 34342
Turkey

Huseyin Al

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
141
Abstract Views
872
rank
234,914
PlumX Metrics