Yönetim Bilimleri Dergisi

Abstract

The financial system consists of fund suppliers and demanders, investment instruments and intermediaries, legal regulations, and regulatory institutions. It is possible to divide the institutions in the Turkish financial system into two as credit institutions which mainly include deposit and participation banks and financial institutions. However, when these institutions in the financial system are considered in more detail, it is seen that they operate in many different areas such as banking, non-banking finance, capital markets, participation finance, insurance, payment systems and electronic money sector. The main purpose of financial institutions is to enable the money movement in the markets to be carried out effectively. In this respect, cash flow between parties with surplus funds and parties with shortfalls is realized through financial institutions. When we consider the Turkish financial system, it would be correct to divide its development into two important periods. The first period, covering the period between 1923 and 1980, was the period when the state intervened heavily in the market with its supervisory and regulatory role and had a pioneering mission in the market. In this period, a closed financial system was adopted so foreign investors and financial institutions were prohibited from carrying on the business or economic activities in Türkiye. The second period, from 1980 to the present, refers to the period when the financial system began to liberalize and the barriers to entry of foreigners into financial markets began to be removed. With the inclusion of foreigners in the financial system, it is seen that foreign currency transactions have started to be carried out. In this period, which covers approximately the last 40 years, financial markets have started to liberalize. In addition, with global integration, digitalization and other advances in technology, diversification of financial instruments, increased financial instability and economic waves are in question. For this reason, in order to maintain financial stability, the roles of existing financial institutions should be questioned, and new financial institutions should be established. In this study, which was carried out in this direction, the historical development and roles of the financial system and its institutions in the 100th year of the Republic were examined in detail. The functions of financial institutions and the duties they should undertake in the future were discussed and suggestions were made.