Cause-effect

Throughout history, the banking system has experienced numerous crises occuring throughout the world. Turkey experienced severe banking crises period between the end of 90's and the beginning of millenium because of several factors. One cause, which may be the most important, was the inadequacy of banking regulations. Due to this lack of regulation, government and related authorities couldn't take required action on time and supervise the banks effectively. Another reason for the crisis was intensive lending transactions of banks with parent companies holding them. These transactions led to a situation in which the financial stability of banks was dependent, to a large extent, on the companies. Financial deterioration of these companies was inevitably reflected in the banks' balance sheets huge losses. Another important factor was the deficient levels of banks' capital. Because of less capital, banks were not able to cope with adverse events happening suddenly in the whole economy of the country.