Journal of Applied Finance & Banking

Perspectives of Turkish Banks on Basel II

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• Abstract

  This research is concerned with Turkish banks’ perception on effectiveness of Basel II, it also aims to capture the possible ‘side-effects’ of Basel II on real economy. It examines how new regulations affect banks’ risk management strategies and bank-borrower relationships and analyzes the role of rating agencies and possible consequences of this intermediation on credit allocation to Small and Medium Sized Enterprises and on banks’ marketing strategy(ies). The effects of new regulations on the competitive structure of the sector, and the issue of procyclicality and financial volatility in emerging economies is also debated to understand the risk management environment in Turkey as well as the effectiveness of new regulation in enhancing the stability of Turkish banking system. The paper ends with a general discussion of the findings derived from open-ended interviews with risk managers of 24 banks and related authorities from the Turkish Banking Regulation and Supervisory Agency.