The political economy of central banking in Turkey: the macroprudential policy regime and self-undermining feedback

Abstract

This article examines the political economy of central banking in Turkey in the aftermath of the global financial crisis. The macroprudential turn led by the Turkish central bank not only created a political backlash from within the AKP government but also revealed the divergent preferences of real and financial sector actors in the Turkish economy. Using the policy regimes and policy feedback framework with a qualitative data analysis methodology, this article argues that the interplay between the contextualised material, ideational, structural and institutional forces, the strategies of leading politicians and how the stakeholders perceived and evaluated the new policy framework had a critical role in shaping the legitimacy, coherence and durability of the macroprudential policy regime in Turkey.