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The Political Economy of Financial Transformation in Turkey

Topal Yılmaz, Aylin
This chapter explains the impact of Turkey’s financial transformation since the 1980s on domestic SMEs. As is common in bank-based emerging markets like Turkey, SMEs have faced difficulties in accessing sources of sustainable finance with the transition to neoliberalism. During the 1990s, governments responded with new public credit mechanisms for SMEs. Then in the 2000s, private banks in Turkey saw SME finance as an increasingly appealing source of returns. This chapter argues that in order to integrate the SMEs into their sectoral networks, the Turkish state, as the risk-taker of last resort, provided financial support for the SMEs. Increasing state support for SMEs is not incompatible with the modalities of a neoliberal capital accumulation strategy. Since the transformation of the banking sector is part and parcel of the transformation of the whole economy, private banks seemed to orient themselves towards opening up new sources of finance for SMEs, provided that the public resources would be made available for strengthening financial credentials and accounting capabilities. Furthermore, this analysis brings to the fore the state as a nodal regulatory agency enabling interpenetration of capital and its overall circulation in the economy.