Post-crisis Restructuring Research Articles

Identifying the Effects of Mergers and Acquisitions on Turkish Banks Performances

Globalization has opened more capital pools of financing in emerging markets where foreign banks can now consider and engage in partnerships, mergers and acquisitions. Banks, the backbone of the financial system, intervene with mergers and acquisitions at a higher rate to better meet the considerations of the industry and the competition. All around the emerging markets, the financial sector has been carrying out acquisitions of private banks, especially in Turkey, where the post-crisis restructuring efforts include merger and acquisition opportunities and strategies for the Turkish Banking Sector. This paper aims to find the effects of mergers, acquisitions and share transfers on the performances of the Turkish Banks between 2001-2012. The Probit Model has been used to identify the performance changes of nine banks that were subject to merger and acquisition. Seven independent variables of Capital Adequacy Ratio, Fixed Assets / Total Assets, Financial Assets / Total Assets, Interest Income / Total Assets, Liquid Assets / Short-term Liabilities, Net Profit / ROA, Net Profit / ROE were used. Based on the analysis, three of the ratios: Fixed Assets / Total Assets, Interest Income / Total Assets, Liquid Assets / Short Term Liabilities decreased following the merger/acquisition in Turkish banks? financials after the merger/acquisition activity of a foreign bank.

Post-crisis restructuring of trade and financial architecture: Asian and European perspectives

Post-crisis restructuring of trade and financial architecture: Asian and European perspectives

Inflation targeting and its discontents: The case of Poland

The paper provides a general evaluation of inflation targeting in Poland with some reference to challenges faced by major central banks. First, it argues that inflation targeting has proved to be relatively successful in Poland and attributes this success to a bias towards the aggressive mitigation of inflationary risks, whenever they have arisen. Second, it briefly explains why the National Bank of Poland does not need to search for an alternative to inflation targeting. Then, it presents the negative aspects of the price level targeting and nominal GDP targeting. Third, it refers to the post- EU accession experience of Poland as being supportive for the “leaning against the wind” approach to monetary policy conducting. Fourth, it argues that such an approach is supported by evidence on the effects of the crisis’ outburst and aggressive interest rate cuts on trust in central banks. Fifth, it indicates the determinants of slow post-crisis restructuring and persistently high uncertainty as desired priorities in the research agenda in central banks.

Liberalization, Post-Crisis Restructuring and Internationalization in Turkish Banking

This study provides a historical review of the transformation of the Turkish banking sector since the initiation of the financial liberalization program in 1980. It demonstrates the roles of macroeconomic, institutional and firm-level factors in the evolution of market and ownership structures as well as the performance of the sector. It focuses on the penetration of foreign banks in the Turkish market and the more recently observed entries of Turkish banks into neighboring countries. It contributes to the literature by illustrating how the domestic macroeconomic and institutional environment together with international banking circumstances affect the processes and outcomes of internationalization in emerging banking markets.

Die Proteste der Refugees

For the first time refugee and migrant protests have developed into a social movement in Germany. The refugee movement is also part of a transnational network, which has developed during and in accordance with the current protest cycle started by the Arab Spring. Broad mobilizations spring from this movement but have not yet let to substantial changes due to the post-crisis restructuring of the EU with „margin“ and „central“ countries. While the neoliberal restructuring in the global south is causing the „production of migration“ to speed up, also the „99 percent“ in the global north are concerned. The migrant and refugee movement is challenging the base of this neoliberal agenda as it aims at the functioning of deterrence, control and deprivation in the global south and north.

Interest Rates Close to Zero, Post-crisis Restructuring and Natural Interest Rate

Central banks do not seem to account for the impact of interest rates close to zero on the natural interest rate after the bursting of the asset bubble that triggered the financial crisis in 2008. We claim that this omission may have harmful consequences. Should interest rates close to zero persistently decrease natural interest rates that would mean a fall in TFP growth and more limited central bank's capacity to influence aggregated demand and price dynamics. We explain that interest rates close to zero may persistently reduce the natural interest rate because in the economy, requiring post-crisis restructuring, they impede the process of restructuring and facilitate forbearance lending, which crowds viable economic agents out of credit through a number of channels. To reduce these risks, the central bank could voluntarily set a lower bound for interest rates cuts at, for instance, 2%. The boundary appropriate for a given economy should be a function of its growth rate and interest rates in the pre-crisis period. We argue that irrespectively of the central bank's credibility such a change in the monetary policy conducting in economies requiring post-crisis restructuring would bring better outcomes than keeping interest rates close to zero.

The Impact of EMU on Corporate Governance: Bargaining in Austerity

Corporate governance in the European Union (EU) has been traditionally seen as a problem of harmonizing or co-ordinating national systems. Here the focus is on the interactions between corporate governance on the one hand and macroeconomic policy on the other. It is argued that the function of corporate governance is a process determined by a structurally embedded dynamic game between major stakeholders and the corporation. The article argues that Economic Monetary Union (EMU) institutions and policymaking, as elements of the institutional environment in which this game is embedded, determine particular parties’ bargaining power and through this the outcome of the corporate governance game and its trajectory. The main focus is on the bargains between labour and financial capital with the corporation, which is mostly destabilized in the EU–EMU environment. The findings carry an important message for post-crisis restructuring.

Missing links: Logistics, governance and upgrading in a shifting global economy

ABSTRACTThis article seeks to argue that logistics services, and the independent logistics industry in particular, should be afforded much more attention within political economy approaches to the global economy. Widespread outsourcing processes and the increased sophistication of logistics provisions mean that the industry has arguably evolved beyond being a mere service input to occupying an integral and strategic role within many global industries. It is, therefore, intimately connected to debates about shifting governance regimes and upgrading dynamics within those industries. Conceptualising logistics from a global production network (GPN) perspective offers the potential for revealing both (1) the contribution of logistics providers to value and upgrading dynamics in client sectors and (2) the ways in which the logistics industry itself can be thought of as a multi-actor value-generation network with its own strategic and upgrading dynamics. The article distils the key contributions and limitations of prevailing business studies approaches to logistics, before charting a four-pronged research agenda that foregrounds the political economy of logistics provisions within the global economy. The analysis concludes by thinking about the implications of on-going post-crisis restructuring within the world economy for the proposed research agenda on logistics and GPNs.

A LESSON LEARNED? PRE- AND POSTCRISIS ENTRY DECISIONS IN TURKISH BANKING

I. INTRODUCTION The banking crisis of 2000-2001 was a significant turning point in the Turkish banking sector. Prior to the crisis, there were two decades of poor decision making, ineffective regulation, and intermittent crises. After the crisis, the banking sector took some steps toward stability and profitability following the restructuring program initiated in 2001 (Kibritcioglu, 2005). However, it is not yet clear whether these policies have prompted a permanent change in the business strategies of Turkish banks. This study is an attempt to determine whether diversification and entry decisions of banks have changed during the postcrisis period. The geographical diversification decisions of banks, captured by their entry into new markets, have recently attracted interest in the banking literature. A number of studies investigate the impact of structural changes on entry decisions in the banking sector. For example, Berger et al. (2004) examine the link between mergers and acquisitions (M&As) and bank entry into local markets in the United States. Similarly, studies by Fuentelsaz and Gomez (2001), Gobbi and Lotti (2004), and Felici and Pagnini (2008) have looked at postderegulation bank entry patterns in Spain and Italy. This study extends this literature by looking at the impact of structural change (the postcrisis restructuring program) on entry decisions of banks while accounting for both firm and market-level characteristics. Of course, the Turkish restructuring program was different than deregulation in the United States, Italy, or Spain since it did not involve the removal of branching restrictions. However, the large number of bank closures during the crisis (the number of deposit-collecting banks fell from 54 to 40) suggests that the structural change in the Turkish banking sector has been equally significant. An examination of entry decisions in the face of structural change is important since expansion does not always lead to positive outcomes. Entering new markets can help banks realize efficiency gains through economies of scale and scope and reduce their risk by diversifying across different regional economic conditions. However, if not managed properly, entry can reduce bank efficiency by increasing agency costs and spreading bad management practices over a larger pool of resources (Berger and DeYoung, 2001). In the case of the Turkish banking sector, there is some evidence of poorly managed geographical expansion prior to the crisis, leading to large and inefficient branch networks. For example, Ozkan-Gunay and Tektas (2006) argue that overall efficiency in Turkish banking declined significantly in the years leading up to the crisis, as capacity in the sector exceeded the amount of banking business that the economy can support. The goal of this study is to determine if this was the case and to investigate whether the expansion strategies of banks improved following the crisis of 2000-2001 and the subsequent restructuring. Results of the empirical analysis reveal changes in the entry decisions of banks following the introduction of the restructuring program. While the precrisis entry decisions do not appear to be fully in line with economic fundamentals, postcrisis entry strategies are more stable and sound, with banks avoiding markets featuring dominant incumbents. This finding, which could signal that the restructuring program has achieved its goal of rationalization of branches and personnel and cost reduction, (1) is the main contribution of this study. Furthermore, the examination of pre-2000 entry decisions suggests that the lack of sound entry strategies may have increased banks' operating costs, contributing to the advent of the crisis. The rest of the study is as follows. Section II reviews the pre-and postcrisis Turkish banking sector. Section III discusses a general model of entry, specifies the empirical approach, and describes the data set. …

Does post-crisis restructuring decrease the availability of banking services? The case of Turkey

This study examines the relationship between post-crisis bank consolidation and the number of bank branches in Turkey. Using a unique data set, the analysis addresses several issues related to the impact of market characteristics on branching behavior. The findings suggest that sales of failed institutions by the central authority lead to branch closures in small and uncompetitive markets where the buyer does not have a prior presence. Contrary to popular belief, mergers between healthy institutions do not always cause a decrease in the number of branches; rather, they are shown to increase the availability of banking services in concentrated markets.

Business groups in East Asia: Post-crisis restructuring and new growth

Business groups played an important role in the economic development of East Asian countries. Yet business groups in East Asia face an uncertain future. Following the Asian Crisis, foreign creditors and investors have demanded that business groups have more transparent operations and stronger corporate governance. At the same time, as governments in East Asia have loosened trade barriers, business groups have become subject to intense competition in domestic markets. This paper argues that business groups can survive or even prosper by taking initiatives in corporate restructuring. This paper also highlights some areas for further research on business groups in this region.

Better by design: Korea's neoliberal economy

This paper examines the processes of bank and corporate restructuring in South Korea since the 1997–98 economic crisis, and seeks to highlight how the state has intervened in a highly dirigiste manner in order to expedite restructuring in both the commercial bank and corporate sectors. At the same time it demonstrates the clear neoliberal principles that have underpinned the state's attempts to promote restructuring. The state has shown a clear determination to take action against insolvent firms and financial institutions no matter how large or strategically important they may be, to impose hard budget constraints on key economic actors. Furthermore, the state has actively sought to engineer the sale of key domestic firms and banks to foreign investors. We argue that Korea's efforts to create a functioning neoliberal economy have been largely successful and are functional from the perspective of Korean capitalism, if not the perspective of individual Korean firms. Changes in the global economy in the two decades preceding the 1997–98 crisis imposed an increasingly inescapable pressure on the Korean state to effect a neoliberal transformation and Korea's future as a centre of capitalist accumulation has for some time been bound up with the success of the neoliberal project. In conclusion, this paper seeks to draw out the broader implications of this reading of the post-crisis restructuring programme for debates on global economic liberalization and the future of capitalist diversity.

The South Korean Economy and U.S. Policy

The South Korean economy is undergoing an economic restructuring based on neoliberal, free-market principles. Mainstream economists claim that that this process was a necessary and successful response to South Korea’s devastating 1997–1998 crisis. This article challenges this claim. It critically exams the economic and social consequences of South Korea’s current neoliberal restructuring; highlights the ways international capitalist dynamics and U.S. policy initially promoted and then undermined South Korea’s growth; describes the role played by U.S. and International Monetary Fund policymakers in shaping South Korea’s post-crisis restructuring; and considers the challenges facing South Korean workers in their struggle to advance a new economic strategy.

CORPORATE DEBT RESOLUTION AND THE ROLE OF FOREIGN CAPITAL IN THE POST‐CRISIS RESTRUCTURING OF THE REPUBLIC OF KOREA

The outbreak of the financial crisis in the Republic of Korea in 1997 exposed the structural weaknesses in the country's economy. Heated debates have failed to generate definitive answers on just what caused the financial crisis. Considering the importance of restructuring the corporate sector, this paper analyzed how the resolution of corporate debts was accomplished and examined the role of foreign capital in Korea's post‐crisis corporate restructuring. Special attention was given to the measures devised to recover nonperforming loans for the liquidation of corporate debts, to the foreign capital inflows through cross‐border M&As or privatization processes, and to the changes in control through corporate governance reforms. This paper concluded that the resolution of corporate debts has been satisfactory and successful and that foreign capital contributed significantly to effective corporate restructuring and debt resolution in the post‐crisis restructuring of Korea.

Is financial liberalization good for developing nations? The case of South Korea in the 1990s

Korea's state-led, bank-based, and closed financial system helped generate its impressive development record from 1961 until the 1997 crisis. However, an ill-conceived liberalization process in the early 1990s eventuated in an IMF takeover in late 1997. Post-crisis neoliberal restructuring, which moved Korea towards a globally open, capital market-based financial system, has thus far failed to generate a sustainable economic recovery. It threatens to significantly lower Korea's long-term rate of capital accumulation. Korea would be well advised to reject neoliberalism, and adopt a modernized and radically democratized version of the traditional model, incorporating a state-led bank-based financial system with capital controls.

ECONOMIC CRISIS AND RESTRUCTURING IN SOUTH KOREA: Beyond the Free Market-Statist Debate

This paper, which examines the causes of the South Korean crisis in 1997-98 and the nature and consequences of the post-crisis restructuring process, looks critically at the neoliberal position but also at what the authors call the statist position (which celebrated and continues to defend the usefulness of industrial policy and state direction of the economy against neoliberal critics). While there are important differences between these approaches, the authors show that because both ignore the structural causes of South Korea's crisis, neither is able to explain, much less help overcome it. The paper then examines the economic, political, and social effects of the restructuring process, demonstrating how it has left the South Korean economy more dominated by foreign capital and the chaebol, and more dependent on exports and labor exploitation than before the crisis. As a result, South Korea appears headed for a new crisis. The authors conclude by highlighting ongoing worker resistance to the restructuring process and a movement-building strategy for advancing a worker/community-centered recovery and development program.

ECONOMIC CRISIS AND RESTRUCTURING IN SOUTH KOREA: Beyond the Free Market-Statist Debate

This paper, which examines the causes of the South Korean crisis in 1997-98 and the nature and consequences of the post-crisis restructuring process, looks critically at the neoliberal position but also at what the authors call the statist position (which celebrated and continues to defend the usefulness of industrial policy and state direction of the economy against neoliberal critics). While there are important differences between these approaches, the authors show that because both ignore the structural causes of South Korea's crisis, neither is able to explain, much less help overcome it. The paper then examines the economic, political, and social effects of the restructuring process, demonstrating how it has left the South Korean economy more dominated by foreign capital and the chaebol, and more dependent on exports and labor exploitation than before the crisis. As a result, South Korea appears headed for a new crisis. The authors conclude by highlighting ongoing worker resistance to the restructuri...