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The pervasive existence of government-owned banks in emerging economies is often justified by their provision of access to credit in remote and underdeveloped regions that are ignored by private banks. This paper analyses whether credits provided by government-owned and private banks have a significant role in regional growth and whether this role changes in politically connected areas in Turkey. Our findings imply that private banks significantly improve the economic well-being in all Turkish provinces regardless of their development level or their political connection with the ruling party. However, credits by government-owned banks are found to be positively related to the per capita growth rate only in the less developed provinces that are advocates of the ruling political party and also developed but not politically connected provinces. These results suggest that government-owned bank credits, as implied by the political view, are used for funding politically desirable projects or politically connected borrowers. [ABSTRACT FROM AUTHOR]

There is widespread literature investigating the relationship between increasing trade openness and economic development; however the relationship between trade (openness) and regional development remains limited. This paper empirically examines the relationship between trade openness and regional development in Turkey. For this purpose, we initially define the regional development index for 81 provinces in Turkey. The definition is based on the concept and the calculation method of the human development index. We then add a few control variables within panel data estimation frameworks to contribute to the explanations of the relationship. The empirical findings show that the increases in trade openness are positively associated with future increases in regional development. In addition, the levels of government investments positively contribute to regional development. However, a negative relationship exists between the size of a province and its development. [ABSTRACT FROM AUTHOR]

The new era of the Post-Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post-financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank-based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ‘financialization’ of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation. [ABSTRACT FROM AUTHOR]