Imposing Reserve Tax to Turkish Financial Institutions for Strengthening Reserves of The Central Bank of the Republic of Turkey

Uluslararası Ekonomi İşletme ve Politika Dergisi, International Journal of Economics, Business and Politics, 4 (1), 101-114, 2020

14 Pages Posted: 23 Apr 2020

See all articles by Mustafa Tevfik Kartal

Mustafa Tevfik Kartal

Borsa Istanbul

Ömer Faruk Tan

Marmara University - Department of Accounting-Finance

Date Written: March 30, 2020

Abstract

Although foreign exchange rates (FER) and inflation increased slowly between from 2002 and 2013, they increased rapidly after that time and they have reached the highest level in 2018 on annual base since 2006. Adverse developments in indicators like FER make negative effects on economic actors by causing uncertainty and uneasiness. They also cause adverse effects on a variety of macroeconomic indicators such as foreign debt burden and interest payments. For this reason, it is important for countries to determine causes of increasing in FER and take measures to keep them under control. For this purpose, there are a lot of conventional tools like tight monetary policy, tight fiscal policy, implementation of harmonious policies and capital controls. In this context, reserves of CBRT are an important tool. However, it is necessary to have adequate reserves in order to use reserves to keep FER under control. Taking into consideration this fact, it is recommended to impose reserve tax liability to financial institutions so that reserves of CBRT could be increased.

Keywords: CBRT, Financial Intermediaries, Reserve Tax, Reserves, Turkey

JEL Classification: E59, G21, G28, H25, K23, N15, O23

Suggested Citation

Kartal, Mustafa Tevfik and Tan, Ömer Faruk, Imposing Reserve Tax to Turkish Financial Institutions for Strengthening Reserves of The Central Bank of the Republic of Turkey (March 30, 2020). Uluslararası Ekonomi İşletme ve Politika Dergisi, International Journal of Economics, Business and Politics, 4 (1), 101-114, 2020, Available at SSRN: https://ssrn.com/abstract=3564227

Mustafa Tevfik Kartal (Contact Author)

Borsa Istanbul ( email )

Reşitpaşa Mah. Borsa İstanbul Cad. No: 4
Borsa İstanbul Cad. No: 4
Istanbul, 34467
Turkey

Ömer Faruk Tan

Marmara University - Department of Accounting-Finance ( email )

Bahcelievler Campus, Ressam Namık İsmail Sokak
No: 1, Bahçelievler
Istanbul, 34840
Turkey

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