Babacan: Turkish real sector needs financial sector to function healthily
by Anadolu Agency
ISTANBULApr 12, 2015 - 12:00 am GMT+3
by Anadolu Agency
Apr 12, 2015 12:00 am
Turkey's banks are strong; however, the development of financial institutions, other than banks, is very important for Turkey, Deputy Prime Minister Ali Babacan said in his speech at the Third General Assembly of the Association of Financial Institutions. Referring to the previous practices they launched for financial circles, Babacan said that all such practices put the financial system on a firm footing in Turkey. Stressing that a significant part of international capital has flowed into the financial sector over the past 12 years, Babacan refuted arguments that this capital enters the sector because it makes good money. "This is not true," Babacan said, adding: "The fast-growing financial sector needs a large amount of capital. Either they need to procure it from outside or they need to save their capital gains and grow their capital in a way that is proportional to their balance sheets." Underlining the significance of institutions for the economy, Babacan noted that they are individually strong and reputable. "In well-functioning democracies, the total strength and prestige of that country is composed of the total strength and prestige of its institutions," Babacan said, continuing that a robust economy depends on a well-functioning democracy, predictability and a sturdy legal and judicial structure.
Babacan stated that regulatory financial institutions, particularly the Banking Regulation and Supervision Agency (BDDK), the Capital Markets Board (SPK), the Savings Deposit Insurance Fund (TMSF), the Treasury and the central bank have all exhibited their strength, reliability and reputation in this process. "If there is confidence in financial institutions, this is partly because of the private sector's contribution. However, overall rational and lawful acts of regulatory institutions in any circumstances are the basis of confidence," he added.
We consider that a healthy-functioning financial sector is one of the mainmasts of an economy, Babacan stated, continuing, "Currently, one of the two strongest mainmasts of the Turkish economy is the financial sector, while the other is the point that Turkish public finance has reached." Underlining that there is an interesting relation between the real sector and the financial sector, Babacan said that it is impossible for the real sector to function in a healthy way in an environment where the financial sector becomes weak. According to Babacan, there are millions of companies in the real sector; however, this figure becomes 50 when it comes to the financial sector and might increase with the inclusion of banks and members of unions. Babacan indicated that the total assets of the financial sector, which consists of financial leasing, factoring and financing companies, increased by 19 percent in 2014 when compared to the previous year, describing this growth as "good." He also pointed to measures taken for credit growth last year.
Touching upon the work that Turkey will carry out during the G20 pro-tempore presidency, Babacan underlined the significance of infrastructural investment and the budgets of many countries do not enable them to cover necessary infrastructural investments.