Breaking the bank: effects of domestic conflict on the banking sector in Turkey
Publication Date
2023
Advisor
Institution Author
Bayer, Reşat
Co-Authors
Ari, Emine
Kemahlioglu, Oezge
Journal Title
Journal ISSN
Volume Title
Publisher:
Routledge Journals, Taylor & Francis Ltd
Type
Journal Article
Abstract
Although banks occupy a central role in most (post-)conflict situations, there is a perplexing lack of attention to them in studies of political violence. As a case experiencing domestic conflict with varying degrees in the last decades, Turkey offers opportunities to understand how the banking sector, including state deposit banks, responds to such political violence. We focus on the short-term impact of political violence and address the following questions: Do all actors in the sector respond in similar ways to security threats? Is there variation according to conflict intensity? We shed light on these puzzles with an analysis of original data on bank ownership, bank branches, bank deposit amounts, and bank credits. We show that banks with profit incentives respond to conflict by lowering their presence in provinces hit by these attacks. In comparison, our finding that deposits in high conflict intensity areas are not affected suggests that it is indeed economic actors outside high intensity regions that are more sensitive to short-time changes in security compared to local ones. Overall, the results demonstrate that political violence hurts banks' presence in conflict locations and their presence matters through credit provision to these areas.
Description
Subject
International relations, Political science