The 1994 Currency Crisis in Turkey

Abstract

No AccessPolicy Research Working Papers25 Jun 2013The 1994 Currency Crisis in TurkeyAuthors/Editors: Oya CelasunOya Celasunhttps://doi.org/10.1596/1813-9450-1913SectionsAboutPDF (0.1 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract:April 1998 Huge requirements for public sector borrowing in 1993 and early 1994, combined with major policy errors in financing the deficit, led to Turkey's currency crash in 1994. As a result of Turkey's currency crisis in 1994, output fell 6 percent, inflation rose to three-digit levels, the Central Bank lost half of its reserves, and the exchange rate (against the U.S. dollar) depreciated by more than half in the first three months of the year. Celasun presents stylized facts associated with the government's debt-financing mechanisms and other relevant macroeconomic variables to show the system's inherent fragility at the time of the crisis and to clarify the extent to which different factors contributed to the crisis. Celasun argues that huge requirements for public sector borrowing in 1993 and early 1994, combined with major policy errors in financing the deficit, led to the currency crash. As a result of interventions to control interest rates and Treasury borrowing at the same time, the market for domestic borrowing almost disappeared, the government turned to monetization for financing, and the value of the overappreciated Turkish lira plummeted. This paper-a product of the Development Research Group-is part of a larger effort in the group to study currency crises. Previous bookNext book FiguresreferencesRecommendeddetailsCited byThe Political Economy of Secularism in Turkey: Beyond Culturalist and Ideational Explanations22 February 2020Investigating the Relationship Between Liquidity and Financial Performance in Turkish Banking Sector: A Pre and Post 2008 Financial Crisis Assessment2 February 2017Income Distribution and Activity Levels in an Open Economy: The Case of Turkey, 1988-2016SSRN Electronic JournalLatest Developments on the Way to EU AccessionEarly warning systems for currency crises: The Turkish caseEconomic Systems, Vol.36, No.3Is It A Way Out of Crises for White Meat Producers to Focus On Export Strategies During Crisis Times?Procedia - Social and Behavioral Sciences, Vol.24CURRENCY CRISES IN EMERGING MARKETS: THE CASE OF POST-LIBERALIZATION TURKEYThe Developing Economies, Vol.46, No.411 November 2008Efficiency, Ownership and Market Structure, Corporate Control and Governance in the Turkish Banking IndustryJournal of Business Finance Accounting, Vol.30, No.9-10Financial deregulation and total factor productivity change: An empirical study of Turkish commercial banksJournal of Banking & Finance, Vol.27, No.8Financial disruption and bank productivity: The 1994 experience of Turkish banksThe Quarterly Review of Economics and Finance, Vol.43, No.2Macroeconomic Instability, Capital Accumulation and Growth: The Case of Turkey 1963-1999SSRN Electronic JournalTechnical, scale and allocative efficiencies of Turkish banking industryJournal of Banking & Finance, Vol.26, No.4A Leading Indicators Approach to the Predictability of Currency Crises: The Case of TurkeySSRN Electronic Journal View Published: November 1999 Copyright & Permissions Related RegionsEurope and Central AsiaRelated CountriesTimor-LesteTurkeyRelated TopicsFinance and Financial Sector DevelopmentMacroeconomics and Economic GrowthPrivate Sector Development KeywordsBANKING CRISESCAPITAL ACCOUNTCAPITAL ACCOUNT LIBERALIZATIONCENTRAL BANKCURRENCYCURRENCY CRISISDEFIC EXCHANGEEXCHANGE RATEINFLATIONINFLATION RATEINTERESTINTEREST RATESINTEREST RATES ON TREASURY BILLSOUTPUT LOSSPUBLIC DEBTPUBLIC DEBT STOCKREAL EXCHANGE RATERESERVESTREASURY PDF downloadLoading ...

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