The Turkish banking sector has suffered from a pattern of booms and lulls in the past, and, as a result, a number of policy reforms have been instituted to improve regulation. The sector looked to be starting a process of maturation in 2013 as it continued to record solid growth without overheating, with lending growing at an annualised rate of 16% in the first two months of 2013. The efforts being made by bankers and regulators to take the long-term view, when markets are putting little pressure on them to do so, bode well. Lower inflation, higher domestic savings, focus on SME lending and longer-term foreign financing will make Turkish banks more resilient and able to fund larger projects. But, as the country enters a middle-income stage of development when economic growth usually becomes harder, banks will need to pay close attention to loan quality.
This chapter contains an interview with Erdem Başçı, Governor, Central Bank of the Republic of Turkey, as well as a banking dialogue with Hakan Ateş, CEO, Denizbank and Süleyman Asla, CEO of Halkbank.