Economy and Banking Sector of Turkey

Turkey is a is a transcontinental country in Eurasia, mainly in Western Asia, and a smaller portion on the Balkan peninsula (Southeastern Europe). Turkey is a candidate for joining the European Union since 1987.

Historically being an agricultural country, Turkey is now emerging as a free-market economy increasingly driven by its industry and service sectors. Main industries of Turkish economy are textiles, food processing, automobiles, electronics, mining, steel, petroleum, and construction.

Turkish banking sector is highly concentrated and is dominated by domestic banks: around one-third of total banking assets are owned by "Big Four" Turkish major banks. There are also a number of international banking groups operating in Turkey via their branches and subsidiaries. Several banks offer Islamic banking products.

Location Western Asia
Population (2016)78 741 053 ↑ (+0.01%)
EU Status not a member, candidate since 1987
National Currency TRY (Turkish lira)
    Exchange Rate (2017-02-10) 1 EUR = 3.9173 TRY
    Nominal GDP (2015)772.6 bln EUR ↑ (+0.09%)
    Nominal GDP per Capita (2011)7 500 EUR no change(unchanged)
    Real GDP Growth (2015)6.1 % ↑ (2014: 5.2 %)
Inflation Rate 
    CPI, MoM (Nov 2016)0.3 % ↓ (Oct 2016: 1.6 %)
    CPI, YoY (Nov 2016)7.0 % ↓ (Oct 2016: 7.2 %)
    CPI, Year Average (2015)7.7 % ↓ (2014: 8.9 %)
Unemployment Rate (2015)10.3 % ↑ (2014: 9.9 %)
Credit Ratings (as of Sep 2016)
    FitchBBB- good credit quality, outlook negative
    Moody'sBaa3 lower medium grade
    S&PBB non-investment grade speculative
Double Taxation Agreements 29 signed agreements
Information Exchange 
    Exchange on Request 5 signed agreements
    Automatic Exchange starts in September 2018
FATCA IGA in effect since 29 July 2015, Model 1
Banking Sector
Financial Market Development 3.8 (max 7.0) rank: 82nd out of 138 countries
    Banks' Soundness 5.2 (max 7.0) rank: 55th out of 138 countries
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 TRL
Country Ceiling for Deposits 
    Local Currency (Turkish lira)A3 upper medium grade
    Foreign CurrencyBaa3 lower medium grade
Banking Sector Structure 
    Number of Banks53
Major Banks
 Akbank  Yapı Kredi Bankası
 Türkiye İş Bankası  Ziraat Bankası
 List of Banks in Turkey

Turkish Economy

National Currency

During the last 11 years EURTRY exchange rate was within the range 1.6987 - 3.3903, reaching its maximum in Sep 2015 and falling to its minimum in Oct 2007.

Euro to Turkish lira (EURTRY).
Chart 1. Euro to Turkish lira (EURTRY). Source: ECB.


According to Eurostat, nominal GDP of Turkey in 2015 was 772.6 bln EUR.

Turkey outperforms the European Union in terms of real GDP growth with the average annual differential coming to 2.9% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 6.1% which was above the Euro Area average (1.6%) and above the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

Real GDP Growth in Turkey.
Chart 2. Real GDP Growth in Turkey. Source: Eurostat, International Monetary Fund.

In 2011, nominal GDP per capita in Turkey was 7 500 EUR.

Turkey has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -34.2% over the past 10 years (2001 - 2011). GDP per capita at PPP in 2012 - 2021 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Turkey; European Union = 100.
Chart 3. GDP Per Capita at Purchasing Power Parity in Turkey; European Union = 100.

Inflation Rate

According to Eurostat, inflation rate in Turkey in 2015 expressed as annual percentages of average consumer prices was 7.7% which was above the Euro Area average (0.0%) and above the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

Inflation Rate in Turkey.
Chart 4. Inflation Rate in Turkey. Source: Eurostat, International Monetary Fund.

Taxation in Turkey

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

Turkey signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Czech Republic
 Malta (Jun 2013)
 United Kingdom

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Turkey signed TIEAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Jersey (Sep 2013)

There are also several agreements between Turkey and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Isle of Man

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Turkey didn't sign the automatic information exchange agreement but made a commitment to start the automatic information exchange in September 2018.

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account Information



Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

Turkey has FATCA agreement with the U.S. in effect since 29 July 2015 (Intergovernmental Agreement Model 1). Financial institutions operating in Turkey are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Turkish financial accounts hold in U.S. financial institutions will be reported to Turkish authorities.

Further Information:
FATCA and European countries


Turkish Banking Sector

Financial Market Development

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Turkey is scored 3.8 out of maximum 7.0 and ranked 82nd out of 138 analysed economies. Soundness of banks is scored 5.2 bringing Turkey into the 55th place, trustworthiness and confidence of financial market is scored 3.9 (94th place).

Financial Market Development in Turkey.
Chart 5. Financial Market Development in Turkey. Source: WEF.

Deposit Guarantee Scheme

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Turkey are summarised in Table 1.

Scheme Participantsall credit institutions operating in Turkey (including branches of foreign banks), branches of Turkish banks abroad
Eligible Depositorsnatural persons
Covered Accountsall cash deposit accounts, precious metals accounts
Maximum Protected Amount100 000 TRL
Paid In CurrencyTRL

Table 1. Deposit guarantee scheme in Turkey.

Further Information:
Deposit Guarantee Schemes in Europe


Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local currency (Turkish lira) deposit ceiling for Turkey is set to A3 (upper medium grade), foreign currency deposit ceiling is Baa3 (lower medium grade).


Banking Sector Structure

Currently there are 53 credit institutions operating in Turkey.

All the credit institutions operating in Turkey can be classified into several categories. Table 2 summarises the number of banks in each category.

CategoryNumber of Banks
Banks under management of SDIF2
Branches of Foreign Banks Established Outside of Turkey6
Central banks1
Foreign Commercial Banks Established in Turkey15
Foreign Investment Banks Established in Turkey4
Participation Banks3
Private Commercial Banks8
Private Investment Banks5
Public Commercial Banks3
Public Investment Banks4
Public Participation Banks2

Table 2. Number of banks by category in Turkey.


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