TY - JOUR
T1 - Fraud, banking crisis, and regulatory enforcement
T2 - Evidence from micro-level transactions data
AU - Soral, H. Bartu
AU - İşcan, Talan B.
AU - Hebb, Gregory
PY - 2006/4
Y1 - 2006/4
N2 - Can widespread fraud cause large scale banking crises? We address this issue in the context of the recent Turkish banking crisis of 2000, which was followed by a severe recession and currency crisis. Using detailed micro-level transactions data, we show that related lending and back-to-back loans across banks were used to circumvent regulation and transfer deposits to private holding companies that were ruined. Our evidence suggests that systemic fraud coupled with weak enforcement of conventional regulatory principles can be a source of banking crisis.
AB - Can widespread fraud cause large scale banking crises? We address this issue in the context of the recent Turkish banking crisis of 2000, which was followed by a severe recession and currency crisis. Using detailed micro-level transactions data, we show that related lending and back-to-back loans across banks were used to circumvent regulation and transfer deposits to private holding companies that were ruined. Our evidence suggests that systemic fraud coupled with weak enforcement of conventional regulatory principles can be a source of banking crisis.
UR - http://www.scopus.com/inward/record.url?scp=33644897645&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=33644897645&partnerID=8YFLogxK
U2 - 10.1007/s10657-006-6649-y
DO - 10.1007/s10657-006-6649-y
M3 - Article
AN - SCOPUS:33644897645
SN - 0929-1261
VL - 21
SP - 179
EP - 197
JO - European Journal of Law and Economics
JF - European Journal of Law and Economics
IS - 2
ER -