Does the Turkish Economy Really Need So Many Banks?
This article draws its inspiration from a topic that dominated the agenda during a meeting with central bank officials of a country some time ago: the excessive number of banks in the country and the concentration in the sector. Officials were complaining that a small number of banks dominated the sector, leaving the remaining banks to struggle with competition, profitability and growth. Rather than allowing new banks to enter the sector, they believed that merging existing small banks could help them compete with larger banks and improve efficiency. As the number of licenses issued by the Banking Regulation and Supervision Agency (BDDK) for the establishment of new banks increases, I recall this discussion. I find myself asking: “Does the Turkish economy really need so many small-scale banks and new banks that will probably remain small in the coming years?” Over the past decade, the number of banks in the Turkish banking sector increased from 50 to 66. While the number of banks remai...