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The Design of a Regulatory Regime to Achieve High Quality Regulation: An Evaluation of Turkey’s Regulatory System

Ali Alp and Saim Kilic

Istanbul Stock Exchange Review, 2007, vol. 10, issue 37, 35-58

Abstract: Regulation is one of the most important tools for government to achieve its social and economic policy objectives. Since it has a great impact on social and economic life of a country, regulation has been an area of political debate and economic research in every country. In the literature, three general theories exist on the origin of and the rationale for government regulation: the public interest theory, the Chicago theory of regulation and the public choice theory. Once the rationales for government intervention have been identified, then the question of how desired regulatory outcomes can be achieved at lower cost arises. The answer to the question is heavily concerned with the regulatory design, no matter which theory is considered. This paper focuses on the regulatory design and ways of better regulation making processes. It is possible to identify a general framework that provides a rigorous and systematic approach to improve quality of both new and existing regulations. This framework includes the use of regulatory impact assessment along with a comprehensive public consultation process and a systematic consideration of alternatives to regulation as well as administrative burden reduction and simplification plans. Countries’ experiences seem to indicate that, if appropriately designed, this framework would be valuable to achieve good regulation. The paper also aims to elaborate on the Turkey’s regulatory system and evaluate its effectiveness. Even though Turkey’s regulatory environment has significantly changed mainly due to the pressures of external forces (namely IMF, World Bank, OECD and the European Union), it still has some weaknesses.

Keywords: Financial Markets; Regulation; Regulatory Design; Regulatory Quality; Regulatory Impact Assessment; Financial Regulation in Turkey (search for similar items in EconPapers)
Date: 2007
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