The Effect of the Disinflation Program on the Structure of the Turkish Banking Sector

On February 21, 2001, Turkish authorities announced the forced abandonment of the pegged exchange rate regime, which was in effect since the launching of the International Monetary Fund backed three-year stabilization program at the end of 1999. This announcement came following the acute liquidity crises of November 2000 and February 2001, which threatened the viability of the Turkish banking system as a whole. The financial turmoil following the abandonment of the pegged exchange rate regime necessitated a revised disinflation program, which is likely to put an end to poor banking practices and deficiencies in supervision by prompting rapid consolidation and taking actions to boost profitability of the banking sector