Description:
This study aims to clarify the influences of state banks on the private banks for Turkey after the second world war. The literature on state banks emphasizes the adverse impact of state, namely the crowding-out effect. On the other hand, state-owned banks arose as a result of development policy associated with the birth of the modern state and play a decisive role in realizing industrialization in countries where private banking and financial markets do not exist. Examining how state banks in Turkey affect private banking requires to portray a picture of state banks' place in the banking system and their role in development policy during the second post-war period. Firstly, to examine the function of public banks, monthly and quarterly statistical bulletins of CBRT, the data of banks' publications and term-end balances of the Turkish Banking Association between 1945 and 1980 were employed in the paper. Then I adopted two different ARDL models to scrutiny the private deposits and loans and interaction with state banks deposits and loans. Consequently, historical perspective portrays that state banks carry out an essential and dominant role in the successful establishment and financing of state economic enterprises (KİTs) such as textile, electricity, dam, and mining areas, and providing the credit needs of agriculture. The empirical estimation results support the evidence of the beneficial contribution of state banks. Briefly, rather than crowding out the private sector, they have contributed to the development of the private sector via resource transfer