Financial Transparency and Sources of Hidden Capital in Turkish Banks

Abstract

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.

Small business lending and credit risk: Granger causality evidence

“…However, Keeton (1999) argues that an increase in loan growth is likely to lead to higher NPL only if the source of faster loan growth is due to a shift in bank credit supply. Therefore, the most plausible explanation for this disconnect is the conservative lending stance adopted by Turkish banks after the severe banking crisis in 2001 and the subsequent policy measures taken by the government to seriously deal with their NPL problems (see, e.g., Tanyeri, 2010;De Jonghe et al, 2012). The coefficient estimates on the error corrections terms suggests that SME lending and non-performing SME loans are related to each other in the long run.…”

Bank Competition and Outreach: Evidence from Turkey

“…24. We refer to Alper and Önis (2003), Kilinç et al (2012), Laeven and Valencia (2012), and Tanyeri (2010) for an excellent discussion about the historical developments in the Turkish economy and, in particular, its financial sector. We refer also to a series of papers written by Önder and Özyildirim (2010, 2011) and Özyildirim and Önder (2008) for an overview of the intermediating role of banks in Turkish regions.…”

Corporate Governance, Opaque Bank Activities, and Risk/Return Efficiency: Pre- and Post-Crisis Evidence from Turkey

“…For the Turkish banking sector, the period after the 1989 financial liberalization can be characterized as follows: in the period before the 2000-2001 crisis, banks operated in a very volatile environment characterized by severe boom and bust cycles that resulted in a major banking crisis at the end of 2000 and early 2001 (see e.g. Alper and Öniş (2003) and Tanyeri (2010) for a detailed discussion). However, in the period after this crisis, the sector has improved its performance as a result of solid restructuring, recapitalization, and supervision and remained largely unfazed in the face of the recent global economic downturn.…”