The Structure of a Financial Crisis Essay

4624 Words19 Pages
The Structure of a Financial Crisis

INTRODUCTION

The year 2001 had been unlucky for Turkey. Apart from the crisis in 1994 and November 2000, the country had to face another financial crisis, causing problems in the management of its economy. Why does a country delve deep into financial crisis? What are the possible immediate triggers for both the current and potential new crises? What precautions should be taken for the key issues like the fragility of the financial and banking system, belated reforms and privatisation, rampant corruption, exchange rate policy? And how can the governments satisfy the markets and people to undertake these reforms?

The current crisis has not hit the country overnight. This article
…show more content…
However, unlike the Transition Economies, Turkey embarked on a prospective plan to privatise a major part of the public sector in the mid 80's and laws enacting and enabling the privatisation of the State Owned Enterprises (SOE) in late 1985, was an important breakthrough. In the 1990's privatisation went ahead but caused disappointment in many sectors. Most privatised firms could not improve their performance and some that succeeded, had been profitable already as SOEs. But that was not the only problem the country had to face. Turkey had already begun to face significant problems regarding the Privatisation Policy in the 1990's. These mentioned problems not only aroused from the aggregate demand concerning the SOE, and the negative effect of investment but the ongoing debate carried by the opposing political parties in the Parliament.

The governments have overcome several difficulties and successfully resumed privatisation in the beginning of the second decade. Though the outcome was promising, the program proceeded more slowly than the original plan. In 1993 for example, a net revenue of US$ 543 millions was raised through several privatised firms including two electric companies, two communications equipment manufacturers, a supermarket chain and four cement factories. In 1994 a total of approximately US$ 412 million was
Get Access