Page "Economy of Turkey" Paragraph 54

Until 1991, establishing a private sector bank in Turkey wasn't easy and was subject to strict government controls and regulations.

On 10 October 1991 ( ten days before the general elections of 20 October 1991 ) the ANAP government of Prime Minister Mesut Yılmaz gave special permissions to five prominent businessmen ( who had close links to the government ) to establish their own small-scale private banks.

These were Kentbank ( owned by Süzer ); Park Yatırım Bankası ( owned by Karamehmet ); Toprakbank ( owned by Toprak ); Bank Ekspres ( owned by Betil ); and Alternatif Bank ( owned by Doğan.

) They were followed by other small-scale private banks established between 1994 and 1995, during the DYP government of Prime Minister Tansu Çiller, who introduced drastic changes to the banking laws and regulations ; which made it very easy to establish a bank in Turkey, but also opened many loopholes in the system.

In 1998, there were 72 banks in Turkey ; most of which were owned by construction companies that used them as financial assets for siphoning money into their other operations.

As a result, in 1999 and 2001, the DSP government of Prime Minister Bülent Ecevit had to face two major economic crises that were caused mostly by the weak and loosely regulated banking sector ; the growing trade deficit ; and the devastating İzmit earthquake of 17 August 1999.

The Turkish lira, which was pegged to the U. S. dollar prior to the crisis of 2001, had to be floated, and lost an important amount of its value.

This financial breakdown reduced the number of banks to 31.

Prime Minister Bülent Ecevit had to call the renowned economist Kemal Derviş to tidy up the economy and especially the weak banking system so that a similar economic crisis would not happen again.