Abstract:

The structural changes in Turkish economy have caused the banking sector to adapt itself to the conditions of low inflation, higher GNP growth rate and appreciation of national currency. In addition, higher domestic and foreign debt and widening foreign trade and current account deficit, high real interest rates create the trouble on the banking sector. Besides that the foreign direct investment started to take the share in some Turkish banks or they takeover for their remaining existence.The securities portfolio is still contribute to the major share in the bank assets. On the other hand, the corporate and consumer loans have shown the large increases in real terms. Although the banking sector gained profits last year, their losses in the previous years are still at the higher levels. The paid-in-capital of the banking sector is not increased.Banking sector tries to realize the effects of EU criteria, Basel I and Basel II and IMF Stand-by agreements. In the banking sector, the privatization of the state banks are not achieved and the effective risk control is not solved. Besides the economic targets and wishes, the problems of developing countries continue to be the troubles of Turkish banking sector. The future success of the banking sector is closely related to the adaptation of the subjects that consist of the main discussion points. The cost - benefit analysis of these developments will give positive direction to the banking sector in the future.

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