How the regulatory authority effects development of meso-level competitiveness of industry: a research on the Istanbul finance sector

Nowadays, the financial services sector cluster is the sector in which global players are most connected to each other, and it is one of the sectors most rapidly affected by global fluctuations. For this reason, to create a highly competitive sector, a solid infrastructure should be completed and a stable financial system with institutionalized relationships between financial players and institutions should be ensured. This study aims to evaluate the relationship between the factors affecting the international competitiveness of the finance sector in Istanbul, based on M. Porter's Diamond Model, with a holistic approach by utilizing Structural Equation Modeling (SEM). As the results of SEM Analysis on Istanbul, it has been determined that government practices have indirect impacts on companies’ strategy and competition as a leading factor, although government applications have a direct positive effect on legal-regulatory infrastructure; market demand conditions, information-technology-based infrastructure, education and HR, workplace-environment, supportive players, and companies' strategic competition policies, it also has indirect effects on transportation through these variables. The fact that government practices directly or indirectly affect other variables highlights the importance of the institutionalization of financial sectors and supportive laws.