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Shadow Banking for Connected Lending and The Countermeasures: Turkish Case

Author

Listed:
  • Ihsan Ugur Delikanli
  • Ali Alp
  • Saim Kilic

Abstract

Paper aims to provide some lessons from the Turkish experiences to regulatory bodies which would like to take measures against shadow banking. It is organized as literature review and case study.The literature review firsly covered the need of banking regulation, then shadow banking and shadow credit intermediation process and the question of how these activities are implemented. The case study described how the banks transferred to Saving Deposit Insurance Fund between 1998-2001 extended more loan to their principal shareholders exceeding legal limits for connected lending via their affiliates or the entities set up in unregulated jurisdictions by considering Shapiro’s (2003) models for intercompany lending activities of the multinational companies and the similarities with the shadow credit intermediation and countermeasures developed by the Turkish authority for them. Our main finding is that it would be needed to revitalize the forgotten justification for banking regulation, keeping them small, asserted by Mishkin (2001). This is why, it could help it to develop the regulations not only by function but also by form.

Suggested Citation

  • Ihsan Ugur Delikanli & Ali Alp & Saim Kilic, 2012. "Shadow Banking for Connected Lending and The Countermeasures: Turkish Case," Istanbul Stock Exchange Review, Research and Business Development Department, Borsa Istanbul, vol. 12(48), pages 31-64, January.
    • Handle: RePEc:bor:iserev:v:12:y:2012:i:48:p:31-64
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    More about this item

    Keywords

    Banking Regulation; Shadow Banking; Shadow Credit Intermediation.;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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