An Empirical Analysis of Productivity Developments in "Traditional Banks" : The Initial Post-Liberalization Experience

By utilizing a non-parametric Malmquist index approach, we investigate the initial changes in the productivity and efficiency of the “traditional” Turkish banks in an era of financial liberalization (1980-1990). We hypothesize that the new liberal environment along with heightened competition from new banks coming from internal and external markets will discipline the traditional banks that are coming from the pre-liberalization period in resource management to economize their production inputs and/or in looking for new ways to expand their financial outputs, resulting in higher productivity and efficiency in these banks. Consistent with the expectations, we found that there is a significant upward trend in the productivity and efficiency of the traditional Turkish banks over the period under study. On the other hand, the results also indicate that the production technology of these banks has not advanced as expected. It appears that productivity growth in traditional Turkish banks mainly stems from the efforts of inefficient banks to catch up with the leading banks (efficiency increase) rather than the expansion of production frontier by the leading banks (technological progress).Traditional Banks, Productivity, Efficiency, Liberalization, Malmquist Index

Financial innovation in Turkish banking

This thesis is concerned with financial innovation in the Turkish banking sector. The primary aim of the thesis is to analyse why financial innovation has started to appear relatively late in the Turkish financial system in comparison with developed financial systems. In addition, it also aims to ascertain whether and to what extent Turkish banks employ financial derivative instruments and asset-backed securitisation. [Continues.