Public Policies Towards Financial Liberalization

TABLE OF CONTENTS ABSTRACT IV ÖZ V ACKNOWLEDGEMENTS VI LIST OF TABLES VII CHAPTERI: INTRODUCTION 1 PART I FROM FINANCIAL REPRESSION TO FINANCIAL LIBERALIZATION: THEORETICAL AND RESEARCH ISSUES CHAPTER II: ECONOMIC DEVELOPMENT AND THE FINANCIAL HISTORICAL BACKGROUND OF THE POLICY DEBATE 7 2.1 Introduction 7 2.2 Growth-Oriented Analysis: The Role of Finance in Economic Development 9 2.3 Financial Repression Analysis and thc Neoclassical Paradigm: The Policy Framcwork in Financial Markets 11 2.4 On the Impossibiiity of Perfect Financial Markets 15 2.5 New Agcnda of Research 20 2.6 Roles for Government in the Financial Liberalization Process 22 2.7 Policy Framcwork in Developing Market Economies 24 2.8 Concluding Comments 25 CHAPTER III: MARKET ORIENTED POLİCY TRENDS: FINANCIAL LIBERALIZATION İN A CHANGING WORLD 29 3.1 Introduction 29 3.2 Impact of Technology on Changes in Financial Markets 29 3.3 Impact of Past Experiencc and Rcgulatory Pressures for Financial Change 30 3.4 Increasing Uncertainty of the Economic Environment and Financial Change Process 31 3.5 Increased Compctition and Financial Change 32 3.6 Financial Change in Developing Market Economies 33 3.7Concluding Comments 34 CHAPTER IV: AN ATTEMPT TOWARDS A METHODOLOGY OF FINANCIAL LIBERALIZATION 37 4.1 Introduction 37 4.2 The Roies of Financial Markets 38 4.3 Phases of Financial Liberalization Processes 39 4.4 Public Policy Objectives in the Financial Liberalization Process: Measures Involved in Different Phases 43 4.5 Dynamics of Bchavioural Change: Theoretical Background of Myopia on Ihe Parl of Economic Agents 45 4.6 Concluding Comments 47 PART II TURKEY'S FINANCIAL LIBERALIZATION IN THE 1980'S CHAPTER V: SALIENT FEATURES OF THE 1980-1992 POLICY EXPERIENCE İN TURKEY 53 5.1 Introduction 53 5.2 Salient Features of the Liberalization Process 54 5.3 Stabilization Over-determines Liberalization 57 5.4 Concluding Comments 60 CHAPTER VI: POST-1980 PUBLIC POLİCY MEASURES TOWARDS FINANCIAL LIBERALIZATION 63 6.1 Introducüon 63 6.2 The Financial Crisis of 1982 and Its Significance 63 6.3 The Financial Sector Reform in Perspective 65 6.4 Measures to Limit Government Intervention to Bilateral Transactions 66 6.5 The Second Phase of the Reform Process 69 6.6 Concluding Comments 77 PART III THE PERFORMANCE OF FINANCIAL LIBERALIZATION POLICIES IN TURKEY CHAPTER VII: FINANCIAL SYSTEM IN THE POST-REFORM PERIOD: POLICY OBJECTIVES AND PERFORMANCE EVALUATION 81 7.1 Introduction 81 7.2 General Overview of the Results of Financial Liberalization Process in Turkey 82 7.3 The Charactcristics of the Period Under Analysis 85 7.4 Increase in the Size of the Financial Sector 86 7.5 Increase in the Volume of Domestic Savings and Investments 88 7.6 Positive High Real Rates of Interest 91 7.7 Short-term Capital Inflows and Exchange Rate Appreciation 95 7.8 Concluding Comments 98 CHAPTER VIII: THE IMPACT OF PUBLIC POLICY MEASURES ON FINANCIAL DECISION MAKING 101 8.1 Introduction 101 8.2 Characteristics of Change in Turkish Financial Markets: An Evaluation of Performance Results 102 8.3 Developmcnts in Individual Markets and Financial Change 112 8.4 Conciuding Comments 138 CHAPTER IX: CONCLUSIONS 141 REFERENCES 145.