The Turkish financial sector has shown resilience even during global financial turmoil and economic crises, largely due to regulatory reforms and structural overhaul introduced by the government after the country’s financial crisis in the early 2000s. These measures boosted investor confidence to such an extent that the industry has become the most attractive sector for FDI, attracting USD 57 billion since 2002.
Banking dominates the Turkish financial sector, accounting for more than 70 percent of overall financial services, while insurance services and other financial activities also hold significant growth potential. In Türkiye, there are 57 banks with 25 classified as foreign banks, including deposit banks, development and investment banks, participation banks, and banks under the management of the Savings Deposit Insurance Fund (TMSF).
The Turkish insurance market is still relatively untapped compared to its peers, and it has the potential to capitalize on its growth opportunities as new insurers establish themselves in the market. Türkiye’s strong economic growth, driven in part by a young and dynamic population increasingly in need of financial products and services, has played a significant role in this trend.
The Turkish financial sector has benefited from the country’s robust and diverse economy, which has seen impressive growth over the 2003-2021 period, with an average annual real GDP growth rate of 5.4 percent. This growth momentum is expected to continue, and Türkiye has become the 11th largest economy in the world in 2021.
Türkiye’s economic expansion has led to higher income and an emerging middle-class with increased purchasing power.
The Turkish government has established ambitious economic goals, one of which is to transform Istanbul into a major financial hub. Istanbul’s favorable attributes, such as its sizable and youthful population, skilled workforce, growing markets, and strategic location, make it an ideal location for an international financial center. Since the government’s launch of the Istanbul Financial Center project, the city has made significant strides towards this goal and is now recognized as one of the world’s emerging financial centers.