| This dissertation presents evidence on how the financial interventions have effects on the balance sheets of banks in the Turkish banking sector. There are bases for the financial interventions regarding banking sector, initiated by the Turkish government. Based on the bases, the financial interventions have influence on the assets and liabilities of commercial banks in the Turkish banking sector (hereinafter, TBS). The dissertation presents empirical evidence that commercial banks—state owned, privately owned and foreign banking groups—in the TBS have experienced, at different level, fluctuations in capital and loan structure during ‘normal’ times and during crises, in light of financial interventions.; Recent interest in financial market interventions, including many financial reforms, results from the desire to prevent banking and financial crises so that the worst business cycle contractions can be avoided. This is especially important in Turkey where changes in financial regulations, as dictated by the government control and supervision units, affect the monetary transmission mechanism. Therefore, the first chapter of the dissertation discusses the bases of the interventionist framework initiated by the Turkish government, in the financial market, especially the banking sector.; Along with a framework for understanding why the Turkish government interventions and institutions should play an important role in financial markets, second chapter explores what direction the government should take in financial market reform. Thus, the section draws attention to how the banking sector in the Turkish economy has been shaped by the financial interventions initiated by the government.; Finally, the third chapter explores bank capital channel, regulatory effects, and riskiness in the TBS, and the last chapter deals with the issue of crowding out, interest and exchange rate shocks, and bank lending in Turkey. In these two chapters, in the comparison of the responses of capital and loan of domestic banks with foreign banks to macroeconomic shocks (i.e., interest and exchange rates, public sector borrowings), and to financial regulations on capital and loan, there is a statistically significant difference between the responses of them. Nevertheless, these chapters come up with some positive evidence on crowding out, the exposure to interest and exchange rate risks, regulatory effect on capital and loan structure, and not strong proof of the existence of the bank capital channel. |
