However, the sector plays less of a financial intermediary role than one would expect in an economy of Turkey's size and sophistication. The four state -owned commercial banks still hold a disproportionately large 34 percent of bank assets, although their share is declining. The sector's five and ten largest banks also have seen their share of assets decline steadily since financial sector liberalization began to take hold in 1985.
Turkish banks engage in core banking services, securities brokering and other businesses.
In terms of trade finance, treasury operations, electronic banking, and information management, the dozen leading Turkish banks are as sophisticated as their other OECD counterparts. One-hundred percent deposit insurance since 1994 is an additional complicating factor. Moreover, accounting practices are neither at commonly-accepted world standards nor evenly applied across the sector. One should expect that, partly under the impact of the competition of U.S. and other foreign banks, the Turkish banking sector will undergo significant consolidation by 2005. The Istanbul Stock Exchange, formed in 1986, is becoming one of the major players in the capital market.