Market turmoil tests the mettle of Turkey’s banks

For all their strengths, the ferocity of this summer’s market sell-off has amplified some vulnerabilities that could be the first true test in a decade of the resilience of banks and the economy as a whole.

The anti-government demonstrations that first erupted in Istanbul before spreading throughout much of Turkey have died down, but the Turkish authorities are now engaged in a very different battle for stability.

Since May, the country has been engulfed by one of the fiercest market sell-offs in stocks and government bonds for a decade or more, forcing borrowing costs up to fresh highs and the Turkish lira down to record lows against the dollar.

In late August, the lira plunged to a new low of 2.04

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