Turkish Banking Crisis
About Turkish Banking Crisis
In February 2001, Turkey experienced a severe banking crisis. The Turkish lira was floated and lost 40 percent of its value. Over 20 banks were taken over by the government. The crisis cost an estimated 30 percent of GDP. The cleanup involved restructuring the banking sector, strengthening regulation, and achieving remarkable fiscal discipline. Kemal Dervi, a World Bank executive, was brought in as Economy Minister and implemented reforms. The recovery was remarkably fast, with GDP growth exceeding 7 percent annually from 2002 to 2007. The post crisis reforms under Dervi and the AKP government created the foundation for a decade of strong growth.
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