State Intervention in Markets Through Regulation and Banking Regulation and Supervision Agency

Abstract

The state intervenes in markets through constitutional, legal, and institutional frameworks, as
well as public policies, to achieve its social and economic objectives. Driven by the globalization
process alongside structual transformations in public administration, and supported by
international organizations such as the IMF and the World Bank, independent regulatory
institutions have proliferated globally. Reflecting the separation of politics and bureaucracy, this
institutionalization wave gained momentum in Turkey during the 1990s and acquired an
institutional identity in the early 2000s. This study addresses the transition to a regulatory
economy in Turkey by examining the rationale behind state intervention in markets, market and
government failures, the concept and historical development of regulation, regulatory methods,
and the necessity of regulation within theoretical frameworks. Finally, it aims to systematically
and comparatively analyze the effects of the transition to a regulatory economy after the 2001
economic crisis on the banking sector in Turkey. In particular, it focuses on the impact of the
establishment of the Banking Regulation and Supervision Agency (BRSA) following the 2001
crisis on the financial soundness of the banking sector, using key performance indicators such as
capital adequacy ratio, non-performing loan ratio, and profitability indicators. By comparing the
periods before the BRSA (1990–2001) and after (2002–present) using up-to-date official data, the
study seeks to provide a concrete assessment of the contributions of the BRSA’s institutional
structure and regulatory policies to the banking sector.