Robust institutions, rules key to becoming an advanced economy: Babacan

Speaking at the third General Board Meeting of the Financial Institutions Association, Babacan underlined the importance of strong rules and institutions in advanced economies. 

“If the democratic system is well-functioning, the legal framework is well-defined and the judicial system is working in a healthy manner in a country, its economy becomes stronger,” he said, noting the importance of “predictability.” 

Babacan said Turkey’s banking watchdog the BDDK and its capital markets watchdog the SPK have shown how to be strong and credible for years, as well as the Treasury. 

Touching on the numbers of the financial sector companies in Turkey, Babacan said there are 30 financial leasing companies, 75 factoring companies and 12 finance companies in the country. The total assets of these three sectors rose by 19 percent in 2014 from the previous year. 

“This is a significant rise, but there would be dramatic rises if we didn’t regulate the system properly … It is of great importance in administrating the economy to slow down when necessary,” Babacan said. 

Meanwhile, Babacan also said the first steps have been taken to establishing a global SMEs forum in Istanbul during Turkey’s ongoing G-20 presidency. 

“We have submitted our proposal to establish a forum to enable small and medium-scaled enterprises [SMEs] to represent themselves to the International Chamber of Commerce [ICC]. Our proposal has been accepted by the ICC and now each member country has been selecting its representative. The umbrella organization will be based in Istanbul and stay in the city after Turkey’s G-20 presidency ends,” he said. 

The deputy prime minister added that the World Bank and regional banks also want to be included in this organization.