Financial Access and “Time-Taxes” in Turkey

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Editor’s Note: Murat Seker and Federica Saliola work in the World Bank's Financial and Private Sector Development Vice Presidency. This blog is a summary of the Country Note prepared for the World Bank's Enterprise Survey. The note for Turkey and several other ECA region countries can be seen at

New data from Enterprise Surveys indicate that firms in Turkey operate quite well in terms of external finance and trade. The usage and cost of finance are among the most favorable in the Eastern Europe and Central Asia (ECA) region. The average firm gets 38 percent of its investment financing from banks, which is 14 percentage points above the regional average. Moreover, the value of collateral required as a percentage of the loan amount (90 percent) is the lowest in ECA (see Figure 1). Since 2005, bank financing has become an increasingly important source of funding.

Turkey has the fifth highest percentage of firms that participate in export markets in ECA (37 percent). Exporters are larger and use foreign inputs more intensively (as a fraction of their total intermediate goods use) than non-exporters. On the other hand, firms in Turkey have a very low percentage of foreign ownership−close to one-third of the regional average.

One of the most striking findings of the survey is that senior management spends 27 percent of its time dealing with government regulations (known as a time-tax). This amounts to more than twice the average time spent in all ECA countries. In around 45 percent of firms, managers spend more than 10 percent of their time dealing with government regulations. Moreover, the amount time-tax increased significantly over time. In the manufacturing sector, it has more than tripled since 2005.

Turkish Firms

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