Basic Problems of the Banking Sector in the TRNC with Partial Emphasis on the Proactive and Reactive Strategies Applied



The banking crisis of the Turkish Republic of Northern Cyprus (TRNC), which occurred at the beginning of the year 2000, has resulted in the liquidation of ten banks and ended up with economic losses of approximately 200 trillion TL, almost equivalent to 50% of GNP for 1999. The main reason for such huge losses for the TRNC economy is due to the fact that the commercial banks and the institutions responsible for regulation, monitoring, supervision of the financial sector together with those running the monetary policies did not have an organizational appreciation of proactive strategies. The amendments made to the Banking Law after the crises to reestablish stability within the sector could not go beyond reflecting the concept of reactive strategies and hence, did not include any proactive strategies necessary for eliminating the negative consequences of probable external factors.

The main aim of this study is to analyze the basic problems of the banking sector in Northern Cyprus with partial emphasis on the applied proactive and reactive strategies and make recommendations accordingly.

This study will include the following consecutive parts:
- The concepts of proactive and reactive strategies
- The current status and functionality of the TRNC Banking Sector
- An analysis of the TRNC banking crisis
- Structural problems of the banking sector in the TRNC
- Conclusion and Recommendations.

Anahtar Kelimeler

TRNC; Banking Sector; Proactive and Reactive Strategies

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