Pointless BRSA – CBRT conflict
Fatih Özatay, PhD
15 November 2010
Views can be different; but we should note that cooperation on risks is crucial. There is a series of indicators used to compare at the international scale the level of development of Turkey's banking sector: size of the balance sheet, total deposits and total credits as a ratio to GDP, etc. Such indicators does not only show how deep the banking sector is but only give an opinion on the size of savings in Turkey. Credits are critical for small enterprises Volume of credits extended by banks as a ratio to GDP is an important indicator. We seek to improve this ratio. Because as this volume rises, investment and consumption expenditures also rise pushing up the growth rate of the economy. I guess the significance of investment credits is apparent. Besides, we seek an increase also in the
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BRSA-CBRT conflict
Fatih Özatay, PhD
14 November 2010
Macroeconomic problems are a concern for BRSA as much as they are for CBRT. Title of Sefer Levent's Saturday commentary in Radikal was 'Laughs in London, conflict in Istanbul'. The commentary begins with the following sentence: "Central Bank of the Republic of Turkey (CBRT) President Durmuş Yılmaz and Banking Regulation and Supervision Agency (BRSA) President Tevfik Bilgin are in conflict for the second time on required reserve ratio."
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Working order and structural reforms
Fatih Özatay, PhD
11 November 2010
The risk argued by State Minister Ali Babacan made me nearly jump out of my skin. On Tuesday, Honorable Minister Ali Babacan held an assessment meeting with the columnists writing on the economy. Such meetings are being held for a long time and if I am not wrong, I have participated in all except one. The meetings are also attended by senior officials from the Treasury and the Central Bank of the Republic of Turkey (CBRT). I used to attend these meetings as an official at the CBRT. I now participate in such meetings as a columnist. But this is not the only thing that has changed; the venue is also different now. Meetings were moved first from Beykoz to Dolmabahce, and than to Florya.
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Dynamism that secures a static position
Fatih Özatay, PhD
08 November 2010
Turkey is praised to shine like a star. But observations and praises do not match. It is impossible not to be surprised about praises about Turkey's economy. Just recently Turkey's economy is praised to shine like a star. We of course wished this was true. However, observations and praises do not match.
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Why did the dog leave the drunken owner?
Fatih Özatay, PhD
04 November 2010
CPI index value for the last twelve months is more than twelve times the headline indicator! Yes, it is right: twelve times higher. Summation of the inflation targets for this year and the next year gives the figure twelve. Of course, in percentage ratio. The statement by the Central Bank reveal that the headline inflation indicator, which is the indicator taken into consideration particularly when making monetary policy decisions refer to the price raises as calculated via the 'l' index. This index excludes the prices of energy, food, tobacco and alcoholic beverages which are considered to be out of the scope of impact of the monetary policy.
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How can we change 'here' into 'there'?
Fatih Özatay, PhD
01 November 2010
The reason for the monetary policy tightening here is the loosening there. FED President Bernanke is referred to as 'Helicopter Ben'. And the reason for introducing the 'helicopter' prefix along with the global crisis is as follows: The primary step central banks can take to buoy the economy is lowering the short term interest rates under their control. They hope that this way interests on credits and deposits which are of greater importance for the economy will also be reduced. This way they aim to stimulate consumption and investment. But they cannot adopt such a policy if interest rate under their control is already near to zero. In that case, the only alternative to boost domestic demand is to carry out monetary expansion. In economics, an anecdote is told that the purest way of increa
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Can you fight if you have no means?
Fatih Özatay, PhD
31 October 2010
Foreign exchange flowing towards developing countries leads to further appreciation of domestic currencies. The US takes actions that give goose bumps to a group of well known economists in the country in order to boost the economy. Since 2008 there appears a significant monetary expansion in the US. On September 3, 2008, the size of the balance sheet of FED was US$907 billion. On November 5, 2008, i.e. in two months, this figure jumped up to US$2.1 trillion. Almost this entire jump resulted from the liquidity injected in the financial system. By the end of 2009, the size of the balance sheet grew slightly by US$100 million. However this time the underlying factor was purchase of Treasury bills by the FED. As of October 27, 2010 size of FED's balance sheet stands at US$2.3 trillion.
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Is the puzzle solved?
Fatih Özatay, PhD
28 October 2010
Factors used to explain the increase in agricultural employment apply in the regions experiencing a fall in agricultural employment, as well. Upon the debates on the increase agricultural employment Seyfettin Gürsel's commentary was published in Radikal daily on Tuesday. He, in his commentary, defined the increase as a puzzle and summarized the results of the research he and two scholars conducted (S. Gürsel, Z. İmamoğlu and T. Zeydanlı, "Puzzle of Agricultural Employment", Betam, October 21, 2010).
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Tax structure in Turkey
Fatih Özatay, PhD
25 October 2010
Same tax rate is imposed for everyone without making any differentiation on the basis of income. I have mentioned several times that the growth rate attained over the last five decades failed to close the prosperity gap between Turkey and developed countries. In fact, the gap remained the same let alone being narrowed down.
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Enterprise scale: Middle East and Europe
Fatih Özatay, PhD
24 October 2010
The egalitarian system in the Middle East hinders enterprise growth and capital accumulation. Today I would like to write about an interview. I deeply recommend you to read the interview with Timur Kuran by Ali Bilge published in Journal of 'İktisat, İşletme ve Finans' October, Issue 295. Timur Kuran studies on the roots of economic underdevelopment in the Middle East. The interview was on the results of this study.
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