Fraud, banking crisis, and regulatory enforcement: Evidence from micro-level transactions data

Soral, H. Bartu; Iscan, Talan; Hebb, Gregory M.

doi:10.1007/s10657-006-6649-y

Cited by 7 publications

(7 citation statements)

References 21 publications

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“…The Central Bank continued to regulate deposit rates until 1988 for the sake of maintaining positive rates of return (Denizer, 1997). Even though banks behaved competitively 3 in terms of determining price for deposits and bank loans throughout the period of analysis (1988)(1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997)(1998)(1999)(2000), regulatory and supervisory mechanisms in the Turkish banking sector have arguably been lagging behind the deregulation of the finan-cial sector (see, e.g., Soral, Iscan, & Hebb, 2006).…”

Section: Background (A) the Banking Sector In Turkeymentioning

confidence: 99%

Market Reaction to Risky Banks: Did Generous Deposit Guarantee Change It?

Önder

Ozyildirim

2008

World Development

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Summary. -Turkey experienced a massive banking crisis in February 2001, resulting in the loss of more than a thousand managerial jobs and the closure of 21% of all bank branches in the market. In this paper, we study the behavior of the market and the banks in Turkey before the crisis, from 1988 to 2000, which includes the period of full deposit insurance. The empirical results showed that not only depositors but also borrowers reacted negatively to risky banks and punished them even more during the period of generous government guarantee. However, in the same period, banks were found to increase their moral hazard behavior significantly. Although the International Monetary Fund and the World Bank recommend explicit deposit insurance for developing countries, the findings of this paper suggest that deposit insurance may not be an effective policy tool to improve market confidence, and it does not guarantee a stable economic environment even when the market reacts negatively to the moral hazard behavior of banks.

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Section: Background (A) the Banking Sector In Turkeymentioning

confidence: 99%

Market Reaction to Risky Banks: Did Generous Deposit Guarantee Change It?

Önder

Ozyildirim

2008

World Development

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“…Panel B statistics are based on 1995-2003 bank failures when they were in custody of the Savings Deposit Insurance Fund (SDIF/TMSF). There were 15 or so ailing banks under regulatory surveillance during this period; the average duration of these banks' "rehabilitation" was an astonishing nine years (Soral, Iscan, and Hebb 2006). These test the null hypothesis to determine whether failed and survived banks are drawn from the same efficiency distributions.…”

Section: Dynamic and Static Analysis Of Managerial Efficiencies Inmentioning

confidence: 99%

“…The banks under Treasury surveillance were even reluctant to leave the sanctuary, given the tax breaks and exemptions (Denizer, Gultekin, and Gultekin 2000). There were 15 or so ailing banks under regulatory surveillance during this period; the average duration of these banks' "rehabilitation" was an astonishing nine years (Soral, Iscan, and Hebb 2006). 5 Ahmet Ert€ urk, head of TMSF, admitted: "Those who were not qualified to obtain a credit card were allowed to own banks in the 1990s.…”

Section: Dynamic and Static Analysis Of Managerial Efficiencies Inmentioning

confidence: 99%

Bank Failures Under Managerial and Regulatory Inefficiency: Three Decades of Evidence From Turkey

Isik

Folkinshteyn

2017

J of Financial Research

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Drawing on a comprehensive data set from Turkey (1970–2003) and using both nonparametric (data envelopment analysis) and parametric (stochastic frontier analysis) frontier methods, we estimate 16 alternative efficiency measures to study their associations with the probability of bank failures in an emerging market setting. We find that failed banks severely underperform survived banks in all forms of efficiency and that their subpar performance deteriorates closer to failure, prosperous times and bloated scales tend to precede eventual banking fatalities, managerially induced (technical) inefficiencies dominate politically induced (allocative) inefficiencies in failed banks, and banks with new ownership and affiliation with other businesses are more likely to fail. The results also caution that liquidity, capital, and currency risks combined with poor management are a lethal mix ahead of crises.

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“…Önder and Özyıldırım (2008) find that despite the presence of generous deposit insurance, borrowers and depositors punished risky banks. Soral et al (2006) document how full-deposit insurance might have contributed to the looting of Esbank.…”

Section: The Choice Of Turkish Banksmentioning

confidence: 99%

Financial Transparency and Sources of Hidden Capital in Turkish Banks

Tanyeri

2009

J Financ Serv Res

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This paper investigates how changes in regulatory and economic environments affect the transparency of banks' financial-statements. Reregulation and a volatile economy make Turkish banks the ideal sample. I disaggregate sources of both hidden and booked capital in Turkish banks traded on the Istanbul Stock Exchange between 1988 and 2006. Hidden capital account for the difference between the accounting and opportunity-cost measures of a firm's net worth. Increases in hidden capital in crisis periods indicate a greater reliance on government-contributed safety-net capital. The increase in hidden capital is more pronounced for large banks. Too-Big-To-Fail policies may explain why large banks are the beneficiaries of government-contributed capital.

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Fraud, banking crisis, and regulatory enforcement: Evidence from micro-level transactions data

Abstract: Banking crises, Regulatory enforcement, Related lending, Looting, Turkey,

Cited by 7 publications

References 21 publications

Market Reaction to Risky Banks: Did Generous Deposit Guarantee Change It?

Market Reaction to Risky Banks: Did Generous Deposit Guarantee Change It?

Bank Failures Under Managerial and Regulatory Inefficiency: Three Decades of Evidence From Turkey

Financial Transparency and Sources of Hidden Capital in Turkish Banks

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