Ankara-Istanbul Paradox of the Istanbul Financial Center Project

Abstract

While Ankara is the official capital city, Istanbul is known as the city of cultural, financial and business center of Turkey and was selected for the Istanbul Financial Center Project. Since Ankara is the capital, all policies and decisions including financial laws and regulations, selection and appointment of high level officials of financial authorities have been made in this city under formal or informal meetings. However, perspectives of Ankara and Istanbul toward financial issues including dosages of financial regulations and selection criteria of high level officials are different from each other. In this respect, following questions have been raised: Does this situation have a potential factor to create instability on management and governance of financial authorities? Is this a potential weakness for the Istanbul Financial Center Project? Considering the relevant questions, this paper has been developed on the following hypothesis: “Being a capital city is a significant / major factor for a financial center.” If the hypothesis is proved to be true, then the Istanbul Financial Center Project has a low chance of success. This paper discusses a paradox which is not a phenomenon for all countries but emerges from mostly improper institutional structures and governance of financial authorities and poor “rule of law” implementations and policies. This research is based on two real world cases.