The Regulatory State and Turkish Banking Reforms in the Age of Post‐Washington Consensus |
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| Authors: | Caner Bakir Ziya Öniş |
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| Institution: | 1. is an Assistant Professor of International Political Economy in the Department of International Relations at Ko? University, Istanbul, Turkey. His areas of research include institutional change in monetary, financial and fiscal governance, globalization and public policy. His work has been published in Public Administration, Governance, and many other academic journals. His new book, Globalization, Governance and Public Policy: Banking in Australia is forthcoming from Palgrave Macmillan.;2. is Professor of International Political Economy and former Director of the Graduate School of Social Sciences and Humanities at Ko? University in Istanbul, Turkey. He has published widely on different aspects of contemporary Turkish political economy as well on broader issues of globalization and development. He is the co‐author of Turkish Politics in a Changing World, Global Dynamics and Domestic Transformations (Bilgi University Press, 2007) and co‐editor of Turkey and the Global Economy: The New Phase of Neo‐liberal Restructuring and Integration in the Post‐Crisis Era (London: Routledge, 2009). |
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| Abstract: | The new era of the Post‐Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post‐financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank‐based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ‘financialization’ of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation. |
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