Crisis and weakened veto players
One of the important differences between the regulatory agencies in banking and telecommunications is the varying power of the veto players - much weaker in the former compared to the latter. The severity of the financial crisis in 2000-2001 helped weaken the veto players while solidifying the linkages between banking regulation and supervision and macroeconomic stability, along with signalling to international investors.
The severity of the financial crisis in 2000-2001 helped generate political will, accompanied by public opinion particularly toward supervision of banking, as the links between a 'healthy banking system' and macroeconomic stability were widely understood. Such links became further solidified in the aftermath of the Turkish crisis and following the 2008 global financial crisis. Thus, the risks associated with inadequate regulation and supervision are considered much higher in banking than in many other sectors.16 Additionally, given the Turkish economy's need for capital inflows to cover its current account deficit, yielding the 'right' signals to international investors and rating agencies gains further importance, and a solid banking system is important in such signalling. Players are more reluctant to use their veto power due to the risk of economy-wide repercussions that could be caused by regulatory failures in banking. In the case of the Turkish banking sector, the veto power of the Ministry of Finance has weakened with the crisis.
Such dynamics contrast with those in the telecommunications sector, where the Ministry holds the ultimate veto power and there exist entrenched interests in sustaining the oligopolistic positions in the sector. Likewise, the BRSA has mostly sustained its autonomy while increasing accountability. It currently has the highest level of de facto independence (amongst all IRAs) with 0.87, based on calculations using Gilardi's (2002) index and the data acquired in interviews.17 BRSA has been praised for effective implementation and good governance, often delineated as important dynamics behind the resilience of Turkish banking (OECD 2010;EC 2011).