This study searched the spatial distribution of banks in order to investigate the transformation of istanbul from a monocentric to a polycentric city. As a result , it has been found out that the old cbd has lost its dominant facilitiesc such as population , employment etc. New centres have been growing rapidly on some peripheral districts. An important explanation of the decentralization is the transformation of the economy of istanbul , which now requires large and modern office space and private car transport , that the old cbd can no more provide.de.

E.Ümran Topçu

English

Research Papers in Economics

  1 
•  41st.Congress of the European Regional Science Association / Zagreb 
 
SPATIAL DISTRIBUTION OF BANKS IN ISTANBUL 
 
E. Ümran Topçu 
Beykent University, Istanbul, Turkey 
umrant@beykent.edu.tr 
 
ABSTRACT 
This study aims to determine the distribution of bank branches in order to investigate 
the transformation trend of Istanbul from a monocentric into a polycentric city. As a 
result, it has been found that the old central business district (CBD) has lost its 
dominant facilities, such as population and employment. New centres have been 
growing on some peripheral districts. The main reason of this decentralization is the 
transformation of the economy of Istanbul, which requires large and modern office 
spaces, private car transport and postmodernisation of lifestyles. 
 
Banks, which happen to serve as the locomotive of finance sector, are the significant 
indicators, as far as their spatial distribution is concerned. The locations where they 
proliferate turn into new centres. 
 
Key words: Spatial distribution, financial sector, subcentres, CBD 
 
INTRODUCTION 
In metropolitan areas all around the world, a continuing decentralization of population 
and business still occur. The case is the same in Istanbul. Istanbul is growing in 
polycentres. Middle and upper income groups have moved into the suburbs, leaving the 
city centre and older suburban areas to lower income groups. Retailers have expanded in 
the suburbs to compete for the growing business of higher income customers. 
 
The future economic base of the central city and particularly its downtown area depend 
on the continued prefernce for CBD locations by financial and specialized service firms 
and by government decisions to maintain offices in the urban core. 
   2 
The aim of this study is to investigate the factors that influence location decisions of 
commercial banks, which are supposed to be rather characteristic in identifying 
subcentres within metropolitan systems. 
 
First, I will give you a brief history of banks in Istanbul and the banking system in 
Turkey. Then I will remind you of the historical development of CBDs and a short 
introduction of the metropolitan city of Istanbul. I will finalize by explaining a case 
study in Istanbul and its results. 
 
A BRIEF HISTORY OF ISTANBUL BANKS 
In the Ottoman era, the most important step of the organization of money and loan 
system, is the passing to the Banks from the Jewellers. This step took place after the 
reforms (Tanzimat). The Ottoman government went through some difficulties in 
balancing the incomes against expenditures. The monetary crisis was often solved by 
borrowing from the Jewellers. And so, the money trade became a profitable job. 
 
The first bank, Bank-	

			
1847, did not have an exact capital. The influence of the developing European 
capitalism, the increase in foreign trading, opening of the local trading for foreigners 
and starting of the production period for the market, had increased money and loan 
operations. The necessity to stablize the value of Turkish money for the backpayments 
of foreign debt, to supply the loan from outside, to supply the foreign exchange stability 
for the backpayments and the necessity to reform the structured money-loan 
mechanisms had caused the Jewellers to become the Bankers and to establish the first 
bank. 
 
	
-	
			
1847, gave permission to two Galata Bankers to constitute a bank, namely (Bank-
Osman-i / Ottoman Bank) in 1856. The first commercial and deposit bank, namely 
Istanbul Bank went bankrupt in 1852. The Ottoman Bank, which also had published the 
banknote, is accepted as the begining of the banking in Turkey. 
 
27 banks followed the establishment of the first bank untill 1923, although most of them 
had a short life. The principal banks which could survive to the Republican period are   3 
 		!"!	#$%
!"%&'!				
(				)!'#*
	+,-.'
Thereafter, the authorization of publishing banknotes and organization for the money-
credit markets had been taken from the foreign banks. 
 
The liberal policies and the efforts of providing a strong private development within the 
period of 1950-1960 had secured the condensation of national capital in banking. In this 
period, the banking system became complete with the commercial and industrial capital 
and 24 new banks, most of them being private banks were opened. The number of bank 
branches greatly increased, from being 594 at the begining of 1950, to 1759 at the 
begining of 1960. 
 
One of the particulars of the Turkish banking system is the common branch banking 
especially for the national banks. In 1923 a total of 420 branches existed, 316 of them 
	!' 	'!	 increased to 6364 branches for 56 banks 
by the end of 1986. 
 
BANKING SYSTEM IN TURKEY 
The Turkish financial system is dominated by the banking system. Financial market 
reforms since 1980, have led to a diversification in financial activities, which let the 
banks to get engaged in all sorts of activities including underwriting securities, 
establishing and managing funds and managing securities for their customers. The result 
is a universal banking system where banks are allowed to engage in all financial 
activities except leasing. 
 
A rapid increase in the number of banks has been observed since 1980, due to liberal 
policies allowing the entry of new banks. 
 
These terms explain banking system in financial words but we should also investigate 
the spatial distribution of banks in cities in general and then in Istanbul. 
   4 
HISTORICAL DEVELOPMENT OF THE CBD’S IN GENERAL 
From the earliest times, the market place has been the focal point of the city, as a centre 
for the exchange of goods. Today, the downtown or central business districts are the 
centre of large metropolitan cities. In urban planning terminology, downtown and 
central business districts are used interchangeably. It is actually the core from which the 
vitality of the metropolitan city finds its nourishment and energy.  
 
Because of agglomeration economies, CBD’s have traditionally been the centre of urban 
banking activity. The importance of rapid flow of information among banks and their 
customers required banks to locate near to the customers and competitors. Since the 
people travelled downtown frequently, CBD bank offices were convenient for them. 
These offices were easily accesible, because most public transport systems radiated 
from the core. 
 
Technological innovations of the 20th. century altered these relationships. Rising 
income levels and car ownership enabled residents to move to suburban locations. 
Retailers and household service firms followed customers to suburbs, in order to 
provide convenient shopping and service sites for the new residents. At the same time, 
with relatively less work and fewer shopping trips being made to the CBD, the bank 
offices in the centres became less convenient. Surveys indicated that people prefer   the 
banks near to their houses rather than their work places. The increased availibility of 
bank offices in the suburban shopping centres, made it possible for people to do banking 
and shopping at the same trip. 
 
What is more, commercial banks have changed their technological systems. Cheques 
and credit cards have replaced cash to a large extent in transactions. The speed of 
information flow has been improved considerably. A second point that the 
agglomeration economies may be important in grouping lots of banks together. 
 
Nowadays, in banking and accounting, there is strong evidence that in many instances 
major corporations headquartered in the functional nodal centres must go out of the 
town to obtain the services they need. 
   5 
INTRODUCTION OF THE METROPOLITAN CITY : ISTANBUL 
Istanbul is one of the most beautiful cities in the world with its cultural and historical 
treasures. It has always had a strategic importance due to its situation of being located 
on a point where the two continents meet. 
 
At present, Istanbul is the largest city of Turkey in terms of population and economic 
activity. The city borders now cover an area of about 6000 sq. kms., a sizeable part of 
which lies on the European side of the Bosphorus and the remaining on the Asian side. 
Its population was 806.863 while that of the country was 13.648.000 according to the 
first census conducted after the foundation of the republic in 1927. In the year 1997, the 
general population turned out to be 62.865.574 while that of Istanbul climbed up to 
9.198.809. These figures reveal that in 70 years Istanbul’s population increased by 
1141% while the population of Turkey increased by 460.62%. 
 
A CASE STUDY IN ISTANBUL BANKING SECTOR 
In order to make the case easier to understand, Istanbul is taken as formed in 3 parts: 
The Core, First Ring, Second Ring. The core is the historical centre and the CBD, 
 %&  /0"' $     	  	   	
14sq.kms., which effects on a circle of 3kms. Radius. First ring, the surrounding area is 
far about 12' 1 	   2	2 /%" 1	 30% 42
Üsküdar, Zeytinburnu. Second ring is about 28 kms. from the core and concerns Adalar, 
0%%*5*26%3	' 
 
 
 
 
 
 
 
 
 
 
   6 
In 1961 there were only 370 bank branches in Istanbul. In 1997 according to the 
statistics of the bank association of Turkey 2291 banks are located in Istanbul. That is to 
say , the core had 44.7% of the bank branches of Istanbul in 1961 but in 1997 it holds 
only 17%. First ring had 42.2% in 1961 but in 1997 its percentage is the biggest being 
51.4%. The second ring had a percentage of 13.1 in 1961 and in 1997 it went up to 
31.6%.  
 
NUMBER OF BANKS IN ISTANBUL ACCORDING  
TO DISTRICTS BETWEEN YEARS 1961 - 1997 
             
   1961 1965 1970 1975 1980 1985 1990 1993 1997 
1 ADALAR  4 4 4 6 8 8 7 6 7 
2 BAKIRKÖY  11 14 31 93  123  133  164  198  389 
3    16 19 35 58 67 70 81  112  214 
4 BEYKOZ  8  8  12 16 21 19 19 17 22 
5  	
  92  99  120 135 147 151 162 150 256 
6  
  75  76  95  111 110 122 128 121 132 
7 EYÜP  10 14 26 40 48 45 50 55 41 
8    45  43  83  116 122 117 115  99  106 
9  	
  0  3  11 19 26 24 25 28 37 
10 KADIKÖY  34  35  64  108 120 126 153 182 337 
11 KARTAL  8  10 30 41 58 71 75 82  164 
12 SARIYER  88  8  15 20 28 26 24 25 51 
13   38  46  83  135 132 157 190 176 257 
14 ÜSKÜDAR  12 13 18 42 51 50 38 62  125 
15   3  5  15 21 26 25 29 30 96 
16 ÇATALCA  2 2 6 9  14  14  14  15  12 
17   2 2 5 6 9  10  9 8  45 
18   2 2 2 3 4 5 5 4 4 
   370 403 655 979  1114  1173  1288  1370  2291 
 
 
This means that, the old CBD has lost its efficiency. It is no more sufficient to locate 
firms needing larger spaces. Building height is restricted due to density regulations in 
the conservation area of the old CBD. On the other hand, some new centres continue to 
develop along the highways, which can provide larger lots for the  large, modern office 
buildings and parking area. The development of banking facilities is a result of internal 
expansion rather than displacement (Dökmeci & Berköz 1993). 
   7 
7				)	%&	eatest number of banks in 
+,8+	0%	)	'%&9	:;'<+,8+
+,,=	++':>'0%9	:',+,8+	+8',>
+,,='!30%			+,,=	'30%9	
increased from 9.1% to 14.7% in a period of 36 years. 
 
Population is another indicator for this case. In 1965 population per number of bank 
0%+:'.?.'!	+='+..	
banks services decreased due to the increase of population. The same explanation can be 
)			)30%'!;'=??@%
bank branch, in 1997 there are 2.075 persons being served by one bank. This means the 
number o))				'630%@%%	
occupy the first place when the results of census 2000 come out. 
 
 
NUMBER OF BANKS IN ISTANBUL ACCORDING TO 
YEARS 
           
    1961 1965 1970 1975 1980 1985 1990 1993 1997 
CORE  167 175 215 246 257 273 290 271 388 
FIRST RING  158 175 324 520 566 590 656 716  1172 
SECOND RING  45  53  116 213 291 310 342 383 731 
   370 403 655 979  1114  1173  1288  1370  2291 
           
           
  PERCENTAGE OF BANKS ACCORDING TO YEARS  
           
           
    1961 1965 1970 1975 1980 1985 1990 1993 1997 
CORE  45,1 43,4 32,8 25,1 22,7 23,2 22,5 19,7  17 
FIRST RING  42,7 43,4 48,9 53,1 50,1 50,2 50,9 5203 51,4 
SECOND RING  12,2 13,2 18,3 21,8 27,2 26,6 26,6  28  31,6 
   100 100 100 100 100 100 100 100 100 
 
 
$	~~~~			%%&
/0"'6	0%30%A0%  8 
being located on the European side and Ka0%  	  	 $
side.Because Istanbul has this very special location, it can also be investigated in terms 
of the two sides.European side of Istanbul holds 65% of the population, which 
corresponds to 6.015.351 persons.As for the number of banks, 1632 of the banks are on 
the European side, corresponding to 71% of all Istanbul banks. Asian side of Istanbul 
holds 35% of the population, corresponding to 3.183.458 persons. As for the number of 
banks, 659 of the Istanbul banks are on the Asian side, corresponding to 29%. 
 
Istanbul, having a population of 9.198.809 persons and a total of 2291 bank branches 
serves an average of 4015 persons per bank. The European side, with a population of 
3686 persons per bank, proves to be below this average while the Asian side with a 
population of 4830 persons per bank proves to be over the average.So it can be said 
that, spatial distribution of banks on the European side of Istanbul is better than the 
Asian side, as far as year 1997 is concerned. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   9 
ASIAN SIDE                   
                
POPULATION      3,183,453   %35 OF ISTANBUL POPULATION 
NUMBER OF BANKS     659      %29 OF ALL ISTANBUL BANKS    
                
4830 PERSONS PER BANK                
                
OVER ISTANBUL AVERAGE                
                
                
EUROPEAN SIDE                   
                
POPULATION 6,015,351        %65 OF ISTANBUL POPULATION 
NUMBER OF BANKS  1632       %71 OF ALL ISTANBUL BANKS    
                
3686 PERSONS PER BANK                
                
BELOW ISTANBUL AVERAGE               
                
                
ISTANBUL                            
                
TOTAL POPULATION                9,198,809       
TOTAL NUMBER OF BANKS              2219         
                
4015 PERSONS PER BANK                         
 
 
 
 
 
 
 
 
   10 
CONCLUSION 
These findings emphasize some new centres in the metropolitan city of Istanbul. It was 
a monocentric city in the 1960s but now there is a continuing transformation to a 
polycentric city. It can be said that the core, the old CBD, is not a source of employment 
any more. Instead, there are new CBDs developing on the peripheral areas of the 
metropolitan city. 
 
As a conclusion, with the evidence provided by the banking sector which is the 
locomotive of the finance sector, it is seen that the banks have transferred themselves to 
	 $	  ) 	 % 30%  % 3*%	& 		'
3öy has a very rapidly growing structure both populationwise and as for the 
)'	/0%	'	
be said that, the expansion of Istanbul’s CBD shows a linear pattern along the 
highways. 
 
This paper illustrates an approach to evaluate urban spatial structure from a monocentric 
to a polycentric development in the Istanbul metropolitan area by analysing the 
distribution of banks and population. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   11 
REFERENCES 
•  Location Theory Seminar Outlines, 2000, I.T.U. Ph.D.Programme in Urban 
Planning 
•  Dökmeci, V. & Berköz, L. (1994), Transformation of Istanbul from monocentric 
to polycentric city, European Planning Studies, Vol.2, No.2, p.193-205 
•  Dökmeci, V. & Berköz, L. (1993), Transformation of Istanbul’s CBD and Office 
Buildings, Istanbul, Literatür 
•  State Statistics Institute, Census, 1960, Social and Economic Properties of the 
Population 
•  State Statistics Institute, Census, 1990, Social and Economic Properties of the 
Population 
•  State Statistics Institute, Census, 1997, Social and Economic Properties of the 
Population 
•  Turkish Union of Banks Publications, (1962), Our Banks 1961, p.45 
•  Turkish Union of Banks Publications, (1966), Our Banks 1965, p.36-41 
•  Turkish Union of Banks Publications, (1971), Our Banks 1970, p.42-49 
•  Turkish Union of Banks Publications, (1976), Our Banks 1975, p.48-59 
•  Turkish Union of Banks Publications, (1981), Our Banks 1980, p.52-65 
•  Turkish Union of Banks Publications, (1986), Our Banks 1985, p.52-65 
•  Turkish Union of Banks Publications, (1991), Our Banks 1990, P.52-65 
•  B*C'
+,,=9%	9!"!!
Union of Banks Publications, Creative 
•  Data obtained from Turkish Union of Banks   http://www.tbb.org 

Theory Seminar Outlines,

Spatial distribution of banks in Istanbul

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Spatial distribution of banks in Istanbul

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