Monetary intermediation is a sub-sector in the monetary system. This sub-sector consists of monetary institutions,in other words deposit firms, insurance companies, and monetary intermediation companies that do not deal with the pension funds.
According to ESA 95 handbook, monetary intermediation is decribed as, an institutional unit's financial transactions and financial asset gains by getting under a financial liability in a financial market.
Institutions taking part in the monetary intermediation sector, are the companies that collect the non-deposit funds. They use these funds in order to get other kinds of monetary assets. Other kinds of companies that could be added to this sub-sector are the ones which are responsible with financing the investment and capital creation. Investment companies, financial renting companies, consumer credit providing companies are the main examples.
In accord with ESA 95 except banks,insurance companies, and pension funds, the other intermediation institutions are ;
Financial Renting Companies
Consumer Financing Companies
Factoring Firms
Tangible Assets and Derivative goods sellers
Specialized Monetary Intermediaries
Others
In 2011, 86 intermediation institutions and 39 banks have had activities in the Capital Market. There are 22 foreign monetary indermediation institutions in Turkey. Efficiency of financial intermediation is very significant for developing countries like Turkey. In order to measure this effectiveness interest margin is needed to be taken into account.
In general investors are reluctant to lend in a long-term or pay their deposits. Financial Intermediaries sort out this problem by converting long-term debts to short-term debts. So that, for example, long term deposits can turn into long-term credits in commercial banks.
Thanks to deposit intermediation, investors can buy and sell funds. In addition, by giving high interest credits to long-term lenders would encourage the long-term investments.
Investment companies, broaden the limited investment alternatives of small investors' by investing in different tools and they have more gain. Financial intermediaries create different portfolios regarding to the risk willingness of investors by holding both risky and risk free assets together.
Since intermediaries have expert workers, they can easily prepare standard contracts and complex transactions. Even though, some investors have time to accomplish these transactions, for professional and institutional investors, it is very important to decrease the contract costs. In addition, information retrieval process becomes so straight-forward owing to these indermediaries.
Table 1 : Monetary Intermediaries in Turkey based on their active scope
YAPI KRED° YATIRIM MENKUL DEÄžERLER A.Åž.
AK YATIRIM MENKUL DEÄžERLER A.Åž.
°Åž YATIRIM MENKUL DEÄžERLER A.Åž. KOÇ
YATIRIM MENKUL DEÄžERLER A.Åž.
GLOBAL MENKUL DEÄžERLER A.Åž.
OYAK YATIRIM MENKUL DEÄžERLER A.Åž.
TAC°RLER MENKUL DEÄžERLER A.Åž.
YATIRIM F°NANSMAN MENKUL DEÄžERLER A.Åž.
HSBC YATIRIM MENKUL DEÄžERLER A.Åž.
VAKIF YATIRIM MENKUL DEÄžERLER A.Åž.
Z°RAAT YATIRIM MENKUL DEÄžERLER A.Åž.
DIÅž YATIRIM MENKUL DEÄžERLER A.Åž.
101,309,144
96,361,564
83,755,955
70,470,486
60,979,796
50,815,059
47,255,383
38,188,108
35,609,702
34,469,622
32,457,877
27,409,934
The activities of Financial Intermediaries in Turkey are edited by SPK and TSPAKB, however there are more wide-scoped organizations outside the Turkey. EFSA is one of these organizations constituted by France, Italy, United Kingdom, Sweden and Spain in January 2007. Another significant organization FMA was first founded in 1955 by the central banks of England and France. One of the most important organizations ICSA was founded by the USA, France, England, Canada, and Japan in 1988. Turkey also is a member of this organization.
4.1 The historical background of The Monetary Intermedian in Turkey
The development of intermediaries in Turkey have started with the foundation of IMKB.
Table 2 : The number of intermediaries and banks in Turkey between 1990 to 2011
Intermediation Instutitions
1990
1995
2000
2001
2002
2003
2004
2011
Intermediation Instutition
48
103
129
123
119
117
114
86
Banks
51
62
73
58
48
44
42
39
Total
99
165
202
181
167
161
154
125
With the foundation of IMKB, the number of intermediary institutions reached to 48 in 1990 while there were only less than ten institutions in 1986. In 1995 103, in 2000 129, and in 2004 there were 114 intermediation institutions playing an active role in the financial system. The rapid increasing trend of intermediaries during 1990's have brought some problems. Ever since 1990's it has been being critisized that the number of intermediation institutions were too much. And this number were limited by the suggestion of SPK in 1991. Not only the number of institutions but also their activity areas were bordered by the new principle that was signed in 15.08.1996. The new role of Banks in the capital market activities were revised in 07.09.2000. The increasing numbers of active monetary intermediation institutions increased the competitiveness among these institutions. Especially due to the crisis in 2001, the competition in the sector was rosed much more, and regarding to this situation the entrance of foreign firms to this sector started.
Literature Review
There are only a few studies relating to Monetary Intermediation in Turkey. However there are several state reports published by SPK and TCMB.
These reports aimed to exhibit the structure of the Turkish Financial System and the role of Financial Intermediation Institutions.
