The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Cheap credit could prove too pricey for Turkey’s fragile economy

Turkey’s strong private-sector banks are its biggest asset – undermining their profitability for short-term political gain will prove counterproductive.

Recep-Tayyip-Erdogan-Turkey-780.jpg

Turkey's president Recep Tayyip Erdogan



Most politicians would like banks to hand out more cash to businesses and voters, particularly at times of economic malaise. Fortunately, most have either too much sense or too little clout to force the issue.

One notable exception is Recep Tayyip Erdogan.

A firm believer in the virtues of cheap credit – and an equally vehement denier of any link between low interest rates and inflation – the Turkish president is also happy to use his vice-like grip on the levers of power to put his theories into practice.

Faced with an economic downturn – largely of his own making – Erdogan has ordered Turkey’s state-controlled banks, which account for around a third of sector assets, to turn on the lending taps.

With bad debt levels rising, that is in itself a risky move.




Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree