144 10 3494 https://omeka.ibu.edu.ba/files/original/a00a6f1d0d0877a4bd52ad6eaab062e4.pdf 90dd6bd1b508312dedab9026b54742e8 PDF Text Text Ökmen, M. (2006) Uyum Sürecinin Ekoloji-Politiği: AB ve Türkiye‘de Çevre Politikaları, AB Yolunda Türkiye: Müzakere Sürecinin Ekonomi Politiği, M. Dikkaya (eds), Alfa Aktüel, İstanbul. Önder, T. (2003) Derin Ekoloji Üzerine, Liberal Düşünce Dergisi, 8 (30-31), Turgut, N. Y. (2009) Çevre Politikası ve Hukuku, İmaj Yayınevi, Ankara. Ünder, H. (1997) Çevre Ahlakı: İnsanmerkezcilik ve Çevremerkezcilik, Adakentliyim, 3 (10). Woods, K. (2006) What Does the Language of Human Rights Bring to Campaigns for Environmental Justice?, Environmental Politics, 15 (4), August, 572-591 Yılmaz, A. Bozkurt Y. (2007) Avrupa Birliği‘ne Uyum Sürecinde Türk Çevre Politikalarının Dönüşümü, Küresel Esintiler ve Yerel Etkiler Sarmalında Türk Kamu Yönetimi, (eds.) A.Yılmaz and Y. Bozkurt, Gazi Kitabevi, Ankara. Importance of Tissue Culture Techniques in Sustainablity of Endangerd plant Species Ibrahim Baktir1*,Gülden Yilmaz1, Özgül Karaguzel2 and Deniz Hazar3 1Akdeniz University, Faculty of Agriculture, Department of Horticulture, Antalya 2Western Mediterranean Research Institute, Antalya 3Akdeniz University, Kumluca Vocational School, Antalya E-mail: ibaktir@akdeniz.edu.tr Abstract Tissue culture techniques have profound importance in mass propagation of various commercial crops in practice as in well known fruit tree rootstocks, a few vegetable and especially ornamental plants as well as some undomesticated plant species. Herbaceous species are somewhat easier to propagate compared to woody ones by tissue culture techniques. These techniques have not affectively applied to native plant species due to economical concerns although so many native plant species have been under threat and therefore they have been facing with extinction in all over the world. Human interferences is the main cause of the extinction of wild species especially in highly populated areas as it is the case in Marmara, Aegean and Coastal Mediterranean regions of Turkey because of new settlements, infrastructural works, overgrazing and uncontrolled collections. Thus, a big number of wild plant species are disappearing every year. Tissue culture techniques have merit value to propagate the endangered wild plant species to release the encountering pressure on these plants Keywords: Tissue culture, endangered species, sustainability 345 �1.What is an endangered plants An endangered species is a population of organisms (animals or plants) which is at risk of becoming extinct because it is either few in numbers or threatened by changing environmental or predation parameters. The International Union for Conservation of Nature (IUCN) has calculated the percentage of endangered species. Many nations have laws offering protection to conservation reliant species: for example, forbidding hunting, restricting land development or creating preserves. In spite of the conservation activities, the threat is a real universal problem. About 9,322 plant species are under threats in the world. Unfortunately, the problem is getting bigger in every next year. The U.S.A is a world leader in endangered plants. The Turkish Flora has a similar problem. The threats facing the Turkish flora are diverse and fall into no fewer than 25 categories, ranging from agricultural reclamation, intensive forestry and industrial/urban development‘s (which often affect sites to a large and highly damaging extent), to less obvious threats such as the collection of species for trade and the spread of invasive alien plant species into environment. Conservation of the endangered species will require a range of approaches to be taken from improved legislation to on-the-ground site management (Özhatay et al., 2005). Due to uncontrolled collection, mainly in herbaceous plants including aromatic and medicinal plants have been facing with threat for years. Unfortunately, there is no official status for these plants yet. The wild plant collectors and traders are getting the advantage of gaps of the status and legislations for uncontrolled wild collections mainly on Western Taurus Mountains. Some of these plants are heavily under threat. Beside flowering geophytes (Galanthus elwesii, Anemone blanda, Eranthis hyemalis, Cyclamen spp. and Stenbergia candida), a list of top ten of these aromatic and medicinal plants are given in Table 1(Özhatay et al., 1997). Table 1: A List of Ten Aromatic and Medicinal Plants Which are Under Threat Scientific Name Family English Name IUCN Categories 1. Acorus calamus Araceae Sweet flag Endangered (ED) 2.Ankyropetalum gypsophylloides Caryophyllaceae Siirt gypsum Data deficient (DD) 3. Ballota cristata Labiatae Foetid, horehound Rare (R) 4.Barlia robertiana Orchidaceae Orchis, salep Endangered 5.Gentiana lutea Gentianaceae Gentian, bitter root Endangered 6.Gypsophiyla arrostii Caryophyllaceae var. nebulosa Arrost‘s baby‘s-root Rare 7.Lycopodium annotinum Lycopodiaceae Wolf‘s claw Data deficient 8.Origanum minutiflorum Labiatae Marjorum Rare 346 �9. Paeonia mascula Paeoniaceae Peony Rare 10. Ruscus aculeatus Liliaceae Butcher‘s broom Vulnerable (VU) *Özhatay et al., 1997. DD-Data deficient: A taxa is DD when there is inadequate information about its distribution and/or population status. ED-Endangered: A taxa is ED when it is not critically endangered but is facing a very high risk of extinction in the wild in the near future. VU- Vulnerable: A taxa is VU when it is not critically endangered but it is facing a high risk of extinction in the wild in the medium-term future. R-Rare: A taxa is R when it is small world populations that is not at present endangered or vulnerable but it is at risk. 2. Tissue Culture Tissue culture (micro propagation) involves the production of plants from very small plant parts, organs, tissues and cells under aseptic conditions in test tubes or various other containers. The environmental conditions and special media either semi solid or suspension which contain inorganic nutrients as well as phytohormones, vitamins, carbohydrates and some others depends on the plant species and cultivars (Murashige and Skoog, 1962). The environmental conditions and light regimes are strictly controlled throughout the cultural activities. The ability to grow plant tissue and various plant organs such as stems, flowers, roots, embryos, and side products in university and research institutes laboratories and also in commercial laboratories has been in effect for many years. Tissue culture is a general term which has been universally accepted for micro propagation of the plants in even though it has specific uses. The application of tissue culture techniques to the regeneration and commercial propagation of a good number of economical plants has been widely used in many countries. Therefore, the tissue culture practices became good alternative for conventional propagation methods for a wide range of important plant species (Babaoğlu et al., 2004; Baktır et al., 2003). Tissue culture systems have two primary uses beside many secondary ones 1) Rapid mass propagation of clones and 2) Development, maintenance and distribution of specific pathogen tested clones especially virus free ones Some of the secondary uses of tissue culture systems are; 1) Propagation of the difficult to root species and cultivars 2) Easiness of selecting promising individuals 3) Various applications in plant breeding 4) Preserving endangered species in stock houses 5) Very practical and useful techniques for gene banks 6) Producing side (secondary) products such as pharmaceuticals‘ in cell suspension systems and so forth. 347 �Tissue culture works are a kind of long chain works with a few important steps as shown in Figure 1. Flowering plant Low-temperature forcing Ready for forcing Parent selection Mass production by seeds Nodes from stalks Cross Mass production by tissue culture Capsule development, 3-6 months Capsule Multiplication in flask, 1-2 years Plants in 10.5-cm pots, 4-6 months de-flask de-flask Plants in 7.5-cm pots, 4-6 months Plants in 4.5-cm pots, 3-5 months Seed germination and subculture, 10-15 months Fig. 1: A detailed schema of tissue culture practices step by step( Chang, 2012) Tissue culture techniques can be easily used for rapid and mass propagation of endangered plant species in order to release the present pressure and also sustainable uses of them. REFERANCES Babaoğlu, M., Gürel, E. And Özcan, S., 2004. Bitki Biyoteknolojisi: Doku Kültürü ve Uygulamaları. Cilt 1. Selçuk Üniversitesi Kampüsü, Rixos Oteli Girişi Yanı, Vakıf İdari Bina, Konya. Baktir, İ., Uysal, S. and Özel, S., 2003. Doku kültürü yöntemi ile miszambak (Lilium candidum ) yetiştiriciliği üzerine bir araştırma. IV: Ulusal Bahçe Bitkileri Kongresi, 8-12 Eylül 2003,514-515, Antalya. Chang, Y.-C. A.,2012. Phalaenopsis Production in Taiwan. XI. International Symposiun on Flower Bulbs and Herbaceous Plants. March 28-April, 2012., Antalya, Turkey Murashige, T. and Skoog, F., 1962. A revised medium for rapid growth and bioassays with tobacco tissue cultures. Physiol Plant 15(3): 473-497. Özhatay, N., Byfield, A., and Atay, S., 2005. Türkiye‘nin 122 Önemli Bitki Alanı. WWW Türkiye(Doğal Hayatı Koruma Vakfı), Istanbul. 348 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1266 Title A name given to the resource Importance of Tissue Culture Techniques in Sustainablity of Endangerd plant Species Author Author Ibrahim , Baktir Abstract A summary of the resource. Tissue culture techniques have profound importance in mass propagation of various commercial crops in practice as in well known fruit tree rootstocks, a few vegetable and especially ornamental plants as well as some undomesticated plant species. Herbaceous species are somewhat easier to propagate compared to woody ones by tissue culture techniques. These techniques have not affectively applied to native plant species due to economical concerns although so many native plant species have been under threat and therefore they have been facing with extinction in all over the world. Human interferences is the main cause of the extinction of wild species especially in highly populated areas as it is the case in Marmara, Aegean and Coastal Mediterranean regions of Turkey because of new settlements, infrastructural works, overgrazing and uncontrolled collections. Thus, a big number of wild plant species are disappearing every year. Tissue culture techniques have merit value to propagate the endangered wild plant species to release the encountering pressure on these plants Keywords: Tissue culture, endangered species, sustainability Date A point or period of time associated with an event in the lifecycle of the resource 2012-05-31 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General),Q Science (General) https://omeka.ibu.edu.ba/files/original/ad4f0662348df5c08101a9ffdd5e40f1.pdf c83030735a35d4737eef2dbd69bd04b4 PDF Text Text Importance Of Training Aimed At Production In Businesses: Educational Studies Carried Out By The Turkish Private Sector Gökhan Ofluoğlu1, Sibel Buzkan2, Sadık Kiliç1 1Zonguldak Karaelmas University Faculty of Economics and Administrative Sciences Department of Labor Economics and Industrial Relations İncivez – Zonguldak 2Zonguldak Karaelmas University Faculty of Economics and Administrative Sciences Department of Business Administration İncivez – Zonguldak Emails: gofluoglu@yahoo.com, sibelbuzkan@yahoo.com, kilicsadik80@gmail.com Abstract There are basically three kinds of educational activities in the World and in Turkey. These are formal/organized education, non-formal education, and informal education. In this age the importance of informal education is increasing. This is due to the inadequacy of formal education and its complementary, non-formal education, for the postfordist contexture of production. In Turkey, businesses do not play a part in any of these three kinds of educational activities. However, their active output are getting larger and larger from formal to informal education. While there is an indirect participation of the businesses on this issue in formal and non-formal education, in informal education there is direct participation. Actually, the core of informal education constitutes the learnings experienced in the work place. In this study, within the training aimed at production in the businesses, apprenticeship workshops which are implemented within the frame of formal education and vocational training which is the extension of formal education, as well as various educational activities and informal education which are implemented within the formal education are discussed. The necessity of informal education and its further connection to productivity is emphasized. Keywords: Productivity, Formal Education, Non-Formal Education, Informal Education. 1.INTRODUCTION There have been studies on the issue of the importance of education beyond measure. Most of these studies emphasized the importance and necessity of education. Indeed, when education is handled efficiently a lot of important development, including productivity follow. In this study, educational activities in Turkey are argued. Not the full extent of the educational 547 �activities, but only the activities which the businesses participate in in the process of education are dealt with. However, educational issues, as they pose an integrated lot, have occasionally been excluded. In the study, it is assumed that there is a closer relation between informal education and productivity and with a presupposition the relation between education and productivity is often assumed to be positive. Assessment and evaluation is one of the leading issues of economic requirements of our time. Above all, assessment provides focusing and scrutinizing in case there is a problem. Various productivity assessments are made. The assessment applied is shaped according to the goal pursued and data provided. In this manner, classification related to productivity assessment can be made according to its extent, its field of application, and according to the scientific discipline. (Akçay, 2011:37-44). Productivity assessments according to their extent are divided into two as follows: with a single factor and with multiple factors. In single factor measurements, not only labor productivity but also capital productivity is assessed. In productivity assessments with multiple factors, on the other hand, input is evaluated as a whole. At this point, labor and capital are evaluated simultaneously and sometimes inputs such as energy and supplies are also attached(OECD, 2001:12). Speaking of productivity, in essence, we comprehend the input-output ratio. Labour productivity analysis at macro level is calculated either as amount of productivity or value of yield per laborer or work done per hour. Instead of productivity value, sometimes wage level can be applied in productivity analysis. However, research has been done indicating that sometimes the wage level and productivity level are not the same(Dearden, Reed, Reenen, 2005:22). In Turkey, since 2005, apart from the first quarter of 2009, labour productivity has displayed a steady increase (General Directorate For Productivity, 2012:1). Table 1: Productivity Charts Country/Disctrict Name Work Done Per Hour Annual Labour Productivity Rate of GDP Per capita Increase (USA=100) 2005 2006 2007 2008 2009 2010 Turkey 44,7 5 4.6 4.7 -0.9 -4.4 3.1 Germany 90,7 1.2 3.6 1.7 -0.1 -2.5 1.4 France 97,7 1.5 2.8 0.3 -1.7 -0.2 1.7 England 78,3 1.2 2.2 1.8 -0.5 -2.1 0.9 USA 100 1.5 0.8 1.2 0.7 2.1 3 OECD Total 75,3 1.5 1.7 1.6 -0.1 -0.3 2.2 G7 Countries 87,6 1.6 1.4 1.2 0.1 0.2 2.4 Source: (online), http://stats.oecd.org/Index.aspx?DatasetCode=LEVEL, and (Online), http://stats.oecd.org/Index.aspx?DatasetCode=PDYGTH, 2012. 548 �In reference to Table 1, Turkey is considerably behind the other countries and regions with regard to productivity of workforce per working hour while sharp increases and decreases are perceived at productivity growth. This calculation is favourable when we consider labour productivity as input-output ratio . Yet, when we try to focus on reasons of increase and decrease of labour productivity we do not have much data because there are a lot of elements effecting labour productivity. Although some of these may be dependent on other factor productivities such as capital and provisions they may also be independent of them. A business or an economy are each an open system. Labour productivity both at macro economic level and management level are effected by environmental factors extensively. Thereby, the fluctuation of labour productivity takes form by the influence of intermediary factors. At that point it becomes difficult to clarify labour productivity. Multi-factor productivity analyses are developed to overcome this drawback. Moreover calculations are made to indicate which factor is higher (Triplett, Bosworth, 2003:27). However, these are also far from taking environmental factors into consideration. A lot of internal and external environmental factors such as the structure of industrial relations, competition, the international openness of the market and Research and Development activities effects productivity (Dawkins, Rogers, 1998:196). “Micro economic reforms” implemented in Australia since 1980 are leading sample cases on this issue. For, these reforms are an effective insidence of environmental factors. Privatizations, repealing or reducing the protective taxes against international trade, labour market deregulation, lifting the impediments in getting into the markets are some of these reforms (Borland, 2012). It is argued that these reforms have positive effects on productivity in many researches made in Australia (Mckenzie, 2005). The allegations in these researches are also supported by ampirical data. Consequently, there are tens of factors that affect labour productivity. Yet, there is such a fact that uneducated society is unskilled at the same time. In this respect, the impact of education on productivity, though it is not possible to prove empirically, has a positive effect. Education in the World and in Turkey can basically be divided into three. These are formal, non-formal and informal education. Formal education (with diploma); is the term given to the kind of education classified traditionally as pre-school, primary education, secondary education and higher education. Non-formal education (certificated) is qualified as the supplementary of formal education and apprenticeship and vocational training in Turkey can be evaluated in this context. As for informal education, it encompasses the education beyond the two denoted education types above and rather related to educational activities performed by private sector. These educational activities are set up to make up some shortcomings. There is usually no diploma or certificate; even if there is a certificate it does not have much formal value. The core of informal education constitute the kind of training, commonly, denoted by the expression “uncertificated” which refers to on-the-job-training. Nonetheless, educational activities arranged to supply with the interests and requirements of the workers of a business are in the range of informal education (İSO, 2012). Besides, an educational activity sometimes goes under more than one category. Particularly, non-formal and informal education may be confused. Hence, certificate is awarded at some kinds of informal education. Human Capital Theory also seperates general (formal) and private (informal) education from one another. Formal education is not an education studied solely for a particular employer or work place or work. Throughout an individual’s life formal education has the quality of being 549 �used in various jobs. However, non-formal education comprises some special gains and in general these gains cannot be transfered from one workplace to another(Viele, 2010:584). Formal education which is agreeable with the Fordist production structure and its complementary non-formal education cannot be satisfying enough for today’s markets. For, postfordist production structure requires keeping the current workforce appropriate to the volatile market conditions. Similarly, replacement of centralized planning by the market oriented economic system emerged in 1980s corroborated this course. In this context, the sample case presented by Lechener (1999:74) for East Germany is basically feasible to a large extent for the other countries as well. That is; in place of formal and non-formal education funded by state, informal education funding of which is undertaken by those who need the education and private sector organization becomes widespread. There is a common belief that there is a linear and positive connection between education and productivity. Moreover, economists perceive the widespreading of education as the crucial element of economic growth(Vinovskis, 1970:550). A lot of writers, such as Schultz, declare that productivity will rise with the rise of the qualities of workforce(Arrow, 1962:172). As educational level increases, possibility of easy adaptation to the changes that occur and structure that is more suitable to technological developments is constituted. Hence it is a known fact that education also generates a lot of positive externality(Nelson, Phels, 1965:75). The common belief that relation between formal education and productivity is positive is one of the fundamental hypothesis of Human Capital Theory. Arrow considers the method of learning named “learning by doing”, substituted by the concept of experience, important in many aspects. In view of Arrow, it is not possible not to observe the importance of experimentation in the growth of productivity (1965:156). Romer (1986:1002) articulated that, in long term growth, instead of falling marginal productivity of the classical theory, rising marginal productivity should be debated on the issue of “knowledge”. According to Romer, when a company’s or an individual’s knowledge increases this situation cannot be restored by the company or the individual and the knowledge spreads. On the issue of decreasing productivities law, which creates indecision, asserting that laborcapital correlation can be positively sloped, there is emphasis on the importance of education, knowledge and learning on the basis of approaches which weakens the basic assumptions of the classical theory. The internal development model elements consist of surge of knowledge, public expenditures and impact of human capital, constitute the models that are developed as an alternative to classical theory. In this respect, Kar and Ağır (2006) who examined the years between 1926 – 1994 reached the finding that spending on education increased growth. At another study researched between the years 1969 – 2001, it is observed that the impact of human capital on growth is more explicitly highlighed (Taban, Kar, 2006:175). In the same manner, yet in another study researched between the years 1960 – 2004, it is observed that growth and education influence one another mutually(Şimşek, Kadılar, 2010:115). Similar findings are reached in the studies researched between 1950 - 2000(Serel, Masatçı, 2005) and between 1923 – 2005 (Özsoy, 2009). The impact of formal education on productivity is realized in an adjournment. The return of today’s formal education investments are gained after quite a long time. The situation on non-formal and informal education is a little different. In these educational types, as there is the question of supplying certain necessities, the impact on productivity is expected at a much earlier time. We must also take into consideration that 550 �education that is not befitting for the necessities, may lessen productivity instead of enhancing it. In essence there are two kinds of education aimed at productivity: the first one is standard (knowledge) and the second one is flexible (aimed at outcome). Today’s educational activities tends rather towards the second one. Some of the causes of this are: structural changes such as: privatization, deregulation, decentralization and authorization; for the companies becoming more international; labour market becoming more flexible, quality and productivity becoming a strategic instrument in engendering a new market; strategic management becoming more valuable than hierarchical management; human resources and human skills being conceived as the most important productivity factor gradually and others (Prokopenko, North, 1997:A-3). In education – productivity corrolation, without doubt, the gainings of education related to work ( the informal education) emerges in a shorter time and it has more direct effect (Dearden vd, 2005:23). But, the acquisition provided after any educational investment and its impact on the productivity is quite difficult to assess. Moreover, assessing solely the production encompasses crucial complications. Labour productivity, on the whole, denotes output coinciding employment per hour. To find this output in service sector is even more difficult(Bolino, 1981:5). Service industry is the sector which has the broadest area of the present day. The business evaluations in this sector are more compelling and evaluation outputs less precise.The difficulties endured at performance evaluation in this sector are also valid at productivity evaluation. In this context, Lee’s categoric division between businesses can be taken into account. Lee divides businesses into two as those that can be evaluated definitely and those that cannot be evaluated definitely(1985:324). It is possible to make precise and trustworthy evaluations with works that we can come to a conclusion and count substantially. The second one is the works that we are trying to evaluate the transformation process between input and output or means-end relations. The target is whether the organization is progressing or not and whether it is effective and efficient or not for which the process requires a variety of behaviours to reach the means-end. The expansion of the service sector has increased the number of businesses the evaluation of which is difficult to make. In a research it is found out that education given to industrial sector provided a rate of increase of productivity more than the education given in services sectors(Maglen, Hopkins, Burke, 2001). Undoubtedly, every country has some educational problems. However, when we compare Turkey with countries such as Germany, France and England, we observe that the problems in Turkey is at a larger dimension. Table 2: Principal Indicators In Education Name Country Educational Participation Expenditures As Of Age GDP Percentage Range 18-24 of In Education Rate of Number of Participation Of students per Age Range 25-64 teacher (2009) In Education(Lifelong Learning) Turkey 2,82 (2006) 26,4 2,5 21,1 England 5,40 (2008) 45,4 19,4 15,8 551 �Germany 4,55 (2008) 55,9 7,7 16,6 France 5,58 (2008) 55,3 5 14,6 Europe 15 4,97 (2008) 53,4 10,4 - Source: data compiled from EUROstat http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/themes, 2012. . (Online) In the context of both formal and non-formal education, it can be observed that with compare to other European countries Turkey has quite unfavourable indicators. Particularly with indicators related to participation to education and educational expenditures there is a distinct difference. When the fact that the population of Turkey is comperatively young is considered, the importance of these negative indicators are doubled. Further additions can be made to Table 2. The rate of illiterate population, the rate of schooling, ranged from preschool to higher education, financial troubles, crowded classes despite excess supply of teaching staff applicants are some of them. To sum up, Turkey’s educational problems are structural. EU membership is a favourable aim at overcoming these problems. Whether full membership to EU is actualized or not it is essential for Turkey to take measures on the issue of education(Gediklioğlu, 2005:70). 2. Participation To Educational Activities In Businesses Turkish private sector administrations participate in educational activities within the frame of some exceptional applications of formal education, the workplace applications of non-formal education and informal education. Contribution to formal and non-formal education shows up in indirect ways whereas informal education is a matter of direct contribution. 3. Formal Education Businesses participate in formal educational activities in connection with apprenticeship applications within the scope of vocational high schools and vocational colleges of higher education. In this respect, it will be more precise to confine the subject matter to vocational high schools and vocational colleges of higher education. However, not only apprenticeship applications are taken into consideration about this issue, but also the common problems of vocational education is dealth with. For, these issues are interlocking issues and their solution requires an integrated point of view. There are a lot of vocational highschools in service. These are basically divided into two; vocational schools like : industrial vocational highschools, trade vocational high schools, islamic vocational high schools, vocational schools for girls, vocational schools of justice and vocational schools of health constitute the first division and the second division constitutes the technical high schools. There is a relatively negative structure in question from the scope of vocational education when compared to economically developed countries according to the percentage of vocational and technical highschools in secondary education. Table 3: The Percentage of Vocational and Technical Highschools Within Secondary Education in Turkey 552 �199697 Percentage of Vocational %45,8 and Technical Highschools Within Secondary Education 199900 200203 200506 200809 200910 201011 %39,56 %32,59 %36,2 %40,7 %42,9 %44 Source : TÜİK, “Educational Statistics”, (Online), www.tuik.gov.tr, 2012. As seen on Table 3, the percentage of vocational and technical highschools from 1996-1999 school years of 45,8% continuously decreased until school year 2002-03 reaching the bottom line of 32,59 % . The percentages that are already behind a lot of western countries diminished lesser and lesser, until it turned to rising trend from 2004 on, coming closer to the level of 1996. During this process vocational schools have lost a lot of respectability in the public eye. Without doubt, the changes on the coefficient applied at university entrance exams is the main reason why this process is endured (Şahin, Fındık, 2008:79). The circumstances gave rise to qualitative losses so much so that it overshadowed the quantitative losses that arose in this respect. Vocational highschools, became the primary educational institutions preferred by the students who fell below the level of avarage. Therefore, even if the coefficient comes up to balance today, it will not be able to solve the problem automatically. German Vocational Educational System could be an agreeable target to enhance the labour productivity of vocational highschools because Germany holds one of the most successful educational systems in the World. In this system named The Dual System, predominantly, the age groups of 15 – 22 get education. 3 – 4 days a week is spent in workplace and 1-2 days a week at school. Two-thirds (2/3) of the time spent at school is filled by vocational subjects (BMBF, 2003:34). Those who graduate from this system may also carry on with the university education. Approximately 2/3 of the age group is involved in The Dual System (ibid:7). Companies contribute in financing directly, and completely set an example of good corporatism. A large majority of students who graduate take place in working life, gaining the status of being “skilled”. German dual system virtually displays non-formal educational characteristic. But, majority of vocational education -leaving apprenticeship education aside- materializes within the scope of formal education. When German system is targeted, 49 we can easily affirm that we are far behind this aim. German dual system is also presented as a leading example model by The World Bank. Hence, this model is even suggested for those countries which are specified as “developed” . It is frequently disclosed that this model also provides a significant amount of cost advantage. Herein, Bennell ve Segerstrom (1998:280)’s comments should be given heed. In their view, German dual system depicts a unique characteristic. Between employers and their uppermost organizations, workers and labour unions and the government an intrinsic corporatism is in question and the roots of this characteristic is extended even to middle ages. 49 See Esin Özdemir, “The Role of German Vocational Education System and Inferences on Vocational Education in Our Country and Chamber System” for further information on determining the German system as an aim and why this system is determined, TOBB European Cooperation Board, (online). www.tobb.org.tr 2012 553 �It is, in essence, absurd to determine corporatism as a target because corporatism (the democratic corporatism) is a social structure that occurs spontaneously and is generally related to culture. However, some of the technical characteristics of German dual system may be determined as target. The application side of apprenticeship of formal education in Turkish vocational educational system remains quite primitive with compare to the German dual system. Training period, summer applications of vocational highschools of health the duration is as long as it is determined in their programs and it is stipulated 300 hours in other vocational highschools and between 30 work-days (240 hours) and 60 work-days in vocational colleges in universities. (Vocational Education Regulations, art.59). One can easily reach to the conclusion that on the whole the implementation applied as two days of school and three days of workshop at workplace is important and necessary in the evaluation with regard to productivity in the final year of vocational schools. Hence, by this means the students have a chance to get to know the work environment. But with regard to the length of time it can easily be suggested that it is not sufficient. At the same time, there is grave distrust on the way this short period is put to use. Principally, the best method of learning is learning by practice (Karcı, 2009:101). Turkey must absolutely move vocational education to workplaces in steady paces. At workplace also, it must definitely be operative and forceful. To attain this, both students’ and employers’ awareness must be raised. Broad responsibilities are conferred upon universities, chambers of industry and commerce and local authorities on this issue. The concerns of vocational education is not solely confined to secondary education. In higher education (tertiary education) similar problems exist. It is a known fact that two years spent in higher education is insufficient, besides, this period is spent with theoretical subjects. Again if we take the implementations in Germany into consiredation, in Germany at higher education institutions equivalent to vocational colleges that take 7 semesters, minimum 2 semesters of apprenticeship training is stipulated. Before training starts, minimum 12 weeks workplace apprenticeship is stipulated as well. Besides, the students who succeed in graduating are entitled a diploma as engineers (Karcı, 2009:104). 3.1. Non-formal Education The non-formal education is constituted by Apprenticeship Training Centers (MEM), Community Colleges (HEM) and other non-formal educational establishments in Turkey. There are totally 392 MEM ( Apprenticeship Training Centers) in Turkey, nearly 300 thousand students take courses in these centers. There are three formal levels which are respectively apprenticeship, journeymanship and workmanship as a result of which students are granted a workmanship certificate and are allowed to open their own workplace. HEM, on the other hand, arranges three kinds of courses. These are: reading and writing courses, vocational technical courses and social cultural courses. Among these only vocational technical courses are directly related to labour market. Yet, it is observed that even these courses are generally aimed at people outside labour or employment (especially the unemployed are considered). Hence within the body of HEM there are 3,4 million trainees (Turkish Statistical Institute : TUİK, 2010:2). Within the category of other elements various schools, centers and institutes exist. Advanced Technical Schools For Girls, Applied School of Art and Craft For Girls, Applied Industrial Apprenticeship Schools, Adults Technical Training Center, Adult Training Center of Hotel Management and Tourism, Open Education Vocational – Technical School, Tourism Training Centers are some of them(Kenar, 2009). 554 �In view of Kenar (2009), the most important component of non-formal education is apprenticeship training. Apprenticeship training is a part of vocational education. There nearly 300 thousand participants receiving apprenticeship education, the number of which corresponds to 10 % of the total vocational education. The programs of apprenticeship education that vary between 2 to 4 years is decided by the boards of “provincial employment and vocational education”. Educational activities done by İş-Kur, The Turkish Employment Organization is within the range of non-formal education. By the establishment of unemployment insurance fund, at the educational activities of the Turkish Employment Organization a huge amount of increase occurred within active employment policies. Hence, in the body of labour training courses, while there was 130 courses and 3868 participants, the amount rose up to 1888 courses and 32 206 participants in 2008 (İş-Kur :The Turkish Employment Organization, 2012). The number of participants reached 224 thousand between January and November in 2011 (General Management Of The Turkish Employment Organization, 2011). Specialized Vocational Course Centers UMEM Skills’10 project and (apprenticeship) or on-the-job training covers quite reformist practices and it is related to our subject more closely. The project of Specialized Vocational Course Centers, consists of educational activities which are set up to overcome the existing structural unemployment. However, as the activities implemented lead to acquiring a more qualified workforce, it should be expected to effect productivity. The project of Specialized Vocational Course Centers: UMEM commenced by signing a protocol between TOBB (Turkish Union of Chamber and Commodity Exchanges, Ministry of Labor And Social Security, Ministry of Education, TOBB (Turkish Union of Chamber and Commodity Exchanges University of Economy and Technology and for the time being it is spread to 81 provinces. In this sense, it displays a good public-private sector cooperation. The components of the project is consist of strenghtening the foundation of education, analysis of labour market requirements, matching/replacing implementation (selection of course trainee, placing to apprenticeship and job replacement of the successful participants) and the application of the newly envisaged courses. The target aimed as a consequence of the project is to employ the course trainee in the particular workplace (UMEM Skills’10 project, 2012). The number of course trainees within the context of Specialized Vocational Course Centers Project rose up to 35 thousand between January – November 2011. 20 TL pocket money is given to the course trainees daily. Another reformist activity by İş-Kur, The Turkish Employment Organization is on-the-job training (apprenticeship). In 2011 5209 participants practiced on this rather new implementation of training, which is very few in number. However, by the objective set by the Ministry Of Labour And Socail Security (MOLSS), deputy under secretary, it is aimed at rising this amount to 400 thousand until 2015 (Tan, 2011:10). There is no doubt that in case this figure is reached, a considerable amount of distance will be covered. Is-Kur provides the participants’ financial support (20 TL daily) for on-the-job training which lasts 6 months. Besides, in the context of “Operation to Promote Young Employment”, encouraging on-thejob training is planned, again, by the support of İş-Kur :The Turkish Employment Organization (İş-Kur :The Turkish Employment Organization, 2011:92). These are pivotal activities because we believe that on-the-job training is the kind of education that has the biggest impact on productivity. This should not come to mean that theoretical education should be totally disregarded. The necessity of certain basic theoretical study is an undeniable reality. Thus, we should avoid making a generalization for all occupational groups because in some occupational groups, intensive theoretical discussions 555 �are necessary. In this generalization rather the professions in the context of the occupational education is emphasized. 3.2. Informal Education The significance of informal education is increasingly better understood in Turkey,like in the World. Informal education comes out with two of its aspects. The first one is a completely informal education (i.e. uncertified), where there is no setup of any kind for education. All sorts of knowledge and skills a worker in any workplace learns on his/her own is in this coverage. The second one is not totally informal. In case of resolving the educational demand of some or all of the workers of a business on any subject, the education acquired by means of purchasing a service is also informal education. This is because in the end of the training, on the whole, either a certificate that may not be transfered to another business is given or else, no certificate of the sort is given at all. For the informal education to have a positive effect on productivity, before all, this education has to be productive, itself. The minimum terms for this kind of education to be productive are as follows: Need-base education analysis: An educational activity done when there is no need to do it may cause the fall of productivity. what is targeted in analysis is to determine the absence of any of the three characteristics of an employee. These are knowledge, skills, and attitute. There is no need for education if there is no inadequacy with any of these characteristics. Instructional design: In line with the specified necessities, first the present situation is examined. At this point, the matter of circumstances concerning what to learn and by whom and the learning medium and its limitations (such as time and money) are important. These are called educational conditions. The present situation as well as other circumstances are related to the motivation of the participants and the desired output. After these conditions are assessed, a method of teaching is selected and practiced (Reigeluth, 1999:9). The evaluation of the results: Undoubtedly the most complicated stage is this one. Business managers and their co-workers wish to know the impact of the educational investment on productivity. An investment has costs. These costs are consist of direct and indirect costs. Educators’ pay, cost of organisation are direct costs. On the other hand, as the worker is away from work for that period of time, this causes a loss of labour. Besides, an opportunity cost also arises at this point. Managers make educational investment with the expectation that these costs will be covered by means of a productivity increase. When faced with the difficulty of calculating the productivity increase, with their intuition, they perceive whether the cost is covered or is not covered. The way to bring this beyond a thought is to activate the process which is known as chain of impact. After an educational investment the following stages must be evaluated respectively (Philips, 1997:5-6): Reaction: Whether the anticipation of participation to an educational program is met or not, is a concern of the satisfaction gained from the program. The level of satisfaction is usually assessed by a post educational survey. However, in the end of this survey whether new knowledge or skill is acquired or not cannot be determined. Learning: It is the study of the evaluation of what the participants gained by the end of the program. The evaluation, although other methods are also used, is assessed by an examination by the end of the program. Yet, the result achieved does not reveal any information about the application of the acquired knowledge about on-the-job practice. 556 �Job applications: The skills learned must be practiced on the job. At this stage, it has to be evaluated whether the acquired skill is applicable on the job or not by various methods. Commonly, this is actualized in a few months period after the program. The outcome of this stage, is a significant assessment that reveals the success of the program. Still, this also does not give a clue whether the job application of the skills contributes to organizational success. Business impact: At this stage, whether the organizational objectives are achieved or not is scrutinized. For instance, customer satisfaction, quality, outputs and costs are some of those. However, these also do not reveal information about the amount of the cost of the program. Return on investment: This is the final stage of the assessment. In this, the financial profit is tried to be calculated. That is, answer to the question: “ Does the program meet the costs?” is searched. The other name for this assessment is cost-benefit analysis. In the book that Philips wrote in 1994 there were only four levels (1994:7). In 1997, by the addition of “business impact” the levels rose up to five. As it is summed up on Table 4, the value of the knowledge acquired at the assessments increase by the rise of the level. Similarly, the power of displaying the actual results and the difficulty of evaluation is growing. But the rate of usage diminishes. Table 4: Chain Of Impact Chain of Impact Value Knowledge Level 1 Frequent of Power Exposing Results of Rate of Usage The The least Valueable Difficulty Evaluation The least powerful of Too Easy (Reaction) Level 2 (Learning) Level 3 (Behavior) Level 4 (Results) Difficult The Most Valuable The Most Powerful Very Rare Source, 1994: 7) Human Resources managers or experts assume significant responsibility in informal education as the unit that determines the educational requirement of the employers are Human Resources Managements. The duty of Human Resources management is to keep the staff in the required number and the qualification available for the business. To this purpose providing workers outside the workplace may be in question as well as the preparation of the present workers to prospective positions by being trained. The latter is more recognized and a more preferred alternative. In respect to this, education is one of the primary duties of the human resources management. 557 �The in-house trainings that are implemented in businesses and educational activities that they materialize by the method of purchasing services from private educational institutions play an important role in informal education in Turkey. But besides this, it is known that they contribute in the process with seminars, conferences and many other educational activities at universities by the collaboration of universities and the industry. Apart from this, it is viewed that institutions such as Small and Medium Industry Development Organization (KOSGEB) also take part in informal education . Hence, KOSGEB (Small and Medium Industry Development Organization) provides financial support for the firms that require education and these educational activities are appraised within informal education. Findings in the research named “Occupational Education In Enterprises Research Results” made by The Turkish Statistical Institute (TUİK) in 2007 have significance from the perspective of our subject. In this research, it is possible to get an idea about the rate of informal education in Turkey. But there are no completely informal, that is, unplanned educations here. Unplanned informal education is continuously effective anytime anywhere. Table 5: Rate of Businesses That Provide Training For Their Employees Among All Businesses, 2007 Case of Producing Occupational Kind Of Occupational Training Training Activity The Size Workplace Group The Rate of The Rate of The Rate of The Rate of Enterprises Enterprises Enterprises Enterprises Providing No Providing Providing Providing Other Of Occupational Occupational Occupational Forms Of Education Education Education Occupational Activities Activities Courses Education Total 68,0 32,0 17,1 23,7 10-49 70,6 29,4 14,7 21,7 50-249 59,7 40,3 23,7 30,0 250+ 53,4 46,6 35,6 34,2 Source: TUİK (The Turkish Statistical Institute). When Table 5 is studied, as the the size of workplace grows, it is seen that the rate of providing occupational education increases. It is a known fact that The Human Resources Management units in larger, more corporate firms are more effective. Yet, it is seen that, including even half of those whose workplace is over 250 employees and 32% of the total businesses organize educational activity. Graph 1: The Rate of Enterprises Providing Occupational Education According to Course Types, 2007 558 �Source: TUİK(The Turkish Statistical Institute). The educational activities of (TUİK) The Turkish Statistical Institute are extended to two divisions, as “courses” and “others”. Courses can be provided internally, organized by the businesses as well as externally, by paying for the services. The other activities are on-the-job guided training, rotation and exchange in offices, employment visits, quality and learning circles, self-directed learning, participating in conferances, workshops, commercial fairs, seminars etc. All these are typical examples of informal education. On Graph 1, the provision of education according to course types and the size ofworkplace is outlined. It is observed that in Turkey providing an external course is preferred rather than the others. As the workplace gets larger, especially when the number of employees it holds becomes more than 250, it is seen providing internal courses is preferred close to 70%. By and large, the rates commonly indicate that informal education in Turkey is yet at the phase of development. Without doubt, informal education compared to other education types has a more effective potential for productivity. This potential has to be used as productively as possible. Educational need analyses are held in informal education in Turkey. Generally, educational activities are initiated according to the analyses results. It is gradually understood better that when the issue of education, which brings out substantial costs for the businesses that operate by the rules of market economy is governed effectively it has a beneficial potential that exceeds the costs. By the information obtained from Chamber of Industry In Istanbul50 , as to whether businesses provide the education in their own organizations or get external education, educational need-base analyses are held. No information has been received on educational planning. However, as an educational activity cannot be implemented without planning, this has to be initially reconciled. That is, no matter what kind of education is talked about at a certain rate a well-designed educational planning is made. The last stage of informal education is evaluation. In Turkey, just like in the world we are confronted with the same chart (Table 4). In the end of the interview with Istanbul Chamber of Industry, a finding of impact assessment after all of the types of education organized is reached. After the impact assessment , the findings show that transition to learning level is fifty percent less. It is concluded that the third level (job application) is rarely a matter and no data are reached in the fifth level application. 50 Istanbul Chamber of Industry Expert Hakan Çoban is interviewed. We are obliged to extend our thanks to Hakan Çoban, Expert and to İSO, the biggest chamber of Industry in Turkey for the invaluable information given on informal education. 559 �In essence, it is natural that chain of impact process works in this manner. Hence, each stage of chain of impact process, although carries on complementing one another, adds some cost. In this respect, the calculation of the return of informal education is a concern of academics rather that firms. To conclude, the calculation of investment return seems to remain as an academic activity-area for some more time to come. By means of some research, it is proved that this return is at quite a high level. (McLinden, Davis, Sheriff, 1994:140). Life-long education in particular is a concept which covers formal, non-formal as well as informal education within its scope. By concept, it is indicated that rather informal education is emphasized. In accordance with the law no. 5544 issued in 2006, Vocational Qualification Authority is established. The aim of this institution is to determine the fundamentals of competence in national technical and vocational areas by taking national and international occupational standarts as a base, and to establish and administer the national competence system necessary to implement assessment and evaluation, and to inform and certify related activities. The professions that require minimum bachelor’s degree are excluded by this law (Law No.5544, article. 1). One of the most important functions of Vocational Qualification Authority(Professional Competency Board) is to award professional competence certificate. Definitions of all existing professions, standards of duty, operation and success, competence related to the instruments used, knowledge and skills requirements, manner and behavior requirements and finally assessment and evaluation criteria are presented in detail. Although completing these impressive studies in a short time is difficult, its progress is known to be rapid. Professional competence certificate is awarded to the labourers who could achieve these standarts. All of these are formed within the framework of national competency. The congruence of National competencies to European Qualifications Framework (AYÇ) still continues. European Qualifications Framework is made up of 8 stages and certification is awarded by these stages. These certifications mean legalizing informal and non-formal education. Via the life-long learning process, a rough calculation is made for an individual who goes through all stages of formal education and is included in the nonformal education regularly every year and is found that the time spent for formal and nonformal education remains 15% and 85% of the time is spent in informal education (Borat, 2009:12). Endeavours for the extention and legalization of this sort of education of no-cost to the public result in noteworthy developments. 4. CONCLUSION Although the interdependence of productivity-education is subject to debate, the impact of education on productivity is an undeniable reality. In Turkey, formal education has multidimentional structural problems. Problems concerning vocational education constitute one of the central problems of formal education. The rate of vocational education is comperatively lower. Apprenticeship application is inadequate quantitavely and is undetermined qualitatively. Within the scope of non-formal education, apprenticeship education and a lot of certificate awarding educational activities are conducted. Apprenticeship education is the most effectively administered area of on-the-job training, which is the best way of learning. Yet, it has been aimed at a comperatively restricted area and a comperatively restricted amount of people. İş-Kur, The Turkish Employment Organization, increased its efficiency by using 560 �unemployment insurance fund, which produced significant outcomes for nonformal education. The project of Specialized Vocational Course Centers, UMEM, and on-the-job training practices are recognized as extremely successful projects. Informal education in the World, as well as in Turkey, is widespread. As the effort to overcome the shortages of knowledge, skills and attitude of employees in informal education outweigh, it has to be emphasized that these kinds of education are more attached to productivity. 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Comparison Study of Approaches to Measuring Poverty Implementing Fuzzy Set and Classic Set Using The Household Data of Turkey Alparslan Abdurrahman Basaran1,Murat Alper Basaran2 1Hacettepe University, Faculty of Economics and Administrative Sciences, Department of Public Finance, 06800, Ankara, Turkey 2Akdeniz University, Faculty of Engineering, Management Engineering Department, 07425,Alanya, Turkey E-mails: aab@hacettepe.edu.tr, muratalper@yahoo.com Abstract Poverty is one of the issues several industrialized and developing countries encounter in the world. No country is exempt from this problem and its consequences. The top list item of the agendas of both countries and international agencies is related to diminishing poverty. Before taking action against it, countries and agencies need to measure poverty based on collected data. It is a sophisticated issue having several dimensions. So far measuring it with available data has resulted with indicators which show some deficiencies. When poverty is considered, it is a linguistic term and has a vague concept as mentioned in the theory of fuzzy set. Therefore, a new approach is proposed in the literature to examine it in order to overcome those deficiencies mentioned when classic tools are employed. On the other hand, fuzzy set theory is a mathematical tool used for linguistic calculations. For example, when said that income level is low. Actually everybody knows what it means. But what it means changes depending upon the perception of the person. Therefore, measuring low income is a problematic area. Fuzzy set theory enables practitioners to calculate those linguistic terms. In this study, the household data of Turkey of the year 2003 collected annually based on almost 25000 is used to calculate both classic poverty indicator(s) and fuzzy poverty indicator in order to compare those measures. In the end we will show that fuzzy poverty indicator can be comprehensive in some comparisons. Also, it provides more information in terms of understanding the concept of poverty 564 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1213 Title A name given to the resource Importance Of Training Aimed At Production In Businesses: Educational Studies Carried Out By The Turkish Private Sector Author Author Gökhan , Ofluoğlu Abstract A summary of the resource. There are basically three kinds of educational activities in the World and in Turkey. These are formal/organized education, non-formal education, and informal education. In this age the importance of informal education is increasing. This is due to the inadequacy of formal education and its complementary, non-formal education, for the postfordist contexture of production. In Turkey, businesses do not play a part in any of these three kinds of educational activities. However, their active output are getting larger and larger from formal to informal education. While there is an indirect participation of the businesses on this issue in formal and non-formal education, in informal education there is direct participation. Actually, the core of informal education constitutes the learnings experienced in the work place. In this study, within the training aimed at production in the businesses, apprenticeship workshops which are implemented within the frame of formal education and vocational training which is the extension of formal education, as well as various educational activities and informal education which are implemented within the formal education are discussed. The necessity of informal education and its further connection to productivity is emphasized. Keywords: Productivity, Formal Education, Non-Formal Education, Informal Education. Date A point or period of time associated with an event in the lifecycle of the resource 2012-05-31 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General),T Technology (General) https://omeka.ibu.edu.ba/files/original/14a2d4c21935f1ed1485be7a16b231da.pdf edecf9fa038e21fa36b61d89d3c70403 PDF Text Text IZDAVAČ Centar za društvena istraživanja Internacionalnog Burč univerziteta Glavni urednik Prof. dr. Abedin Bikić (Pravni fakultet Sarajevo) Urednik specijalnog izdanja Dr. Iza Razija Mešević Kourednik specijalnog izdanja Robert Kordić Međunarodni uređivački odbor Prof. dr. Teoman Duman (Internacionalni Burč univerzitet), Prof. dr. Jusuf Büyükay (Fatih univerzitet), Doc. dr. Engin Karabulut (Fatih univerzitet), Doc. dr. Vesna Baltazarević (Megatrend univerzitet) Uređivački odbor Prof. dr. Hajrija Sijerčić-Čolić (Pravni fakultet Sarajevo), Prof. dr. Suzana Bubić (Pravni fakultet „Džemal Bijedić“ u Mostaru), Prof. dr. Enes Hašić (Pravni fakultet Zenica), Prof. dr. Nevzet Veladžić (Pravni fakultet Bihać), Doc. dr. Zlatan Meškić (Pravni fakultet Zenica), Doc. dr. Maja Čolaković (Pravni fakultet „Džemal Bijedić“ u Mostaru), Doc. dr. Hamid Mutapčić (Pravni fakultet Tuzla), Doc. dr. Zlatan Begić (Pravni fakultet Tuzla), Doc. dr. Šukrija Bakšić (Pravni fakultet Zenica), Doc. dr. Haris Halilović (Fakultet za kriminalistiku i sigurnosne studije Sarajevo), Mr. sci. Almedina Šabić (Pravni fakultet Sarajevo), Mr. sci. Esad Oruč (Internacionalni Burč univerzitet) Izvršni urednici Elvir Čolak, MA (Internacionalni Burč univerzitet), Senahid Kahteran (Internacionalni Burč univerzitet), Mensur Zoletić (Internacionalni Burč univerzitet) Lektori Niđara Pašanović, MA. Elvira Čolo, BA. Tehničko uređenje Internacionalni Burč univerzitet Alen Čamdžić Štampa Arka PRESS d.o.o. Tiraž 300 primjeraka E-mail drustveniogledi@ibu.edu.ba Internet stranica ssrc.ibu.edu.ba Broj godišnjih izdanja 2 Broj 2/2014 ISSN 2303-5706 DOI: 10.14706/DO14221 "Društveni ogledi - Časopis za pravnu teoriju i praksu” je dostupan u punom tekstu u Online biblioteci Centralne i Istočne Evrope - CEEOL (www.ceeol.com) i na web stranici www.ssrc.ibu.edu.ba �PUBLISHER Social Sciences Research Center of International Burch University Editor Prof. Dr. Abedin Bikić (Faculty of Law in Sarajevo) Editor of the special issue Dr. Iza Razija Mešević Co-editor of the special issue Rober Kordić International Editorial Board Prof. Dr. Teoman Duman (International Burch University), Prof. Dr. Jusuf Büyükay (Fatih University), Doc. Dr. Engin Karabulut (Fatih University), Doc. Dr. Vesna Baltazarević (Megatrend University) Editorial Board Prof. Dr. Hajrija Sijerčić-Čolić (Faculty of Law in Sarajevo), Prof. Dr. Suzana Bubić (Faculty of Law „Džemal Bijedić“ in Mostar), Prof. Dr. Enes Hašić (Faculty of Law in Zenica), Prof. Dr. Nevzet Veladžić (Faculty of Law in Bihać), Doc. Dr. Zlatan Meškić (Faculty of Law in Zenica), Doc. Dr. Maja Čolaković (Faculty of Law „Džemal Bijedić“ in Mostar), Doc. Dr. Hamid Mutapčić (Faculty of Law in Tuzla), Doc. Dr. Zlatan Begić (Faculty of Law in Tuzla), Doc. Dr. Šukrija Bakšić (Faculty of Law in Zenica), Doc. Dr. Haris Halilović (Faculty for Criminal Justice, Criminology and Security Studies), Mr. Sc. Almedina Šabić (Faculty of Law in Sarajevo), Mr. Sc. Esad Oruč (International Burch University) Editorial Assistants Elvir Čolak, MA (International Burch University), Senahid Kahteran (International Burch University), Mensur Zoletić (International Burch University) Lectors Niđara Pašanović, MA. Elvira Čolo, BA. 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Extent The size or duration of the resource. 2979 Title A name given to the resource Impressum stranica Casopis za pravnu teoriju i praksu Author Author BIKIĆ, Abedin Publisher An entity responsible for making the resource available Centar za društvena istraživanja Internacionalnog Burc univerziteta Date A point or period of time associated with an event in the lifecycle of the resource 2014 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-5706 H Social Sciences (General),K Law (General) https://omeka.ibu.edu.ba/files/original/eab8eafeb8478dda0a2384faea84194b.pdf 9acd76a6ddf14151cddf2f28d9213710 PDF Text Text Journal of Economic and Social Studies Improved Business Climate and FDI in the Western Balkans Rufi Osmani South East European University Macedonia rufi.osmani@seeu.edu.mk Abstract: The process of economical and political transition in the Western Balkans, up to this point has shown a high correlation between achieved economical results and the determination of national authorities for drawing and implementing policies for economical stabilization and development as well as structural reforms with the support of the International Monetary Fund, the World Bank and other relevant international institutions. The analyzed countries from the Western Balkans region have managed to achieve appropriate levels of macroeconomic stability and an improvement of the business climate due to the implemented reforms, these countries have not been successful enough in attracting Foreign Direct Investments as a precondition to ensure a more dynamic economical development and an appropriate fall in the level of unemployment and poverty. A comparative analysis of the real economic indicators of the Western Balkans countries as contracted to the EU average shows that these countries are well under the real convergence levels of the EU countries. Keywords: Busines Climate, Structural Reforms, Foreign Direct Investment, Economic Development, Western Balkan Countries, Europian Union JEL Classification: E3, E4, F15, F21, M21, M48, O10, O11, O12 Article History Submitted: 02 June 2015 Resubmitted: 04 September 2015 Resubmitted:19 October 2015 Resubmitted: 10 November 2015 Accepted: 04 December 2015 http://dx.doi.org/10.14706/JECO SS16611 The main objective of the paper is to provide some additional arguments regarding the potential positive or negative correlation between the business climate and the levels of Foreign Direct Investments in the Western Balkans countries, some of which are already members of the EU and others aspiring to become members in the future, having in mind the asymmetric economic positions of the countries being analyzed. Volume 6 Number 1 Spring 2015 5 �Rufi Osmani Introduction The complex political and economic transition in the countries of the Western Balkans in the past two decades has been accompanied by numerous economic and political asymmetrical strokes. During this complex process the governments of the countries of the Western Balkans (WB) with the assistance of the IMF and World Bank implemented the economic policies that aimed to achieve macroeconomic stabilization, transformation and privatization of state owned enterprises and to reform the economic system and public institutions. After two decades of implementation of intensive economic policies the countries of the Western Balkan have achieved macroeconomic stabilization but the results in reforming the economy, reforming the public sector and the public institutions are in insufficient level and continue to remain challenges for these countries in the future. In fact, the asymmetric development during the previous system and the low levels of economical growth in the first decade of the transition followed by increasing levels of unemployment, poverty, the large informal sector and fiscal evasion were the main obstacles in implementing deep institutional reforms and establishing a functional market economy in the Western Balkan’s (Osmani & Mazllami, 2014). The process of economic and political transition in the Western Balkans due to achieved asymmetric results do not solve in approriate level three main problems of economic transition (Commander, 1991). 1) Finding a new balance between private sector and public sector, 2) Finding the balance between profits and wages in the private sector, and 3) Finding the balance between monetary and fiscal policy within the strategy that aim macroeconomic stabilization and economic development. Three balances realized at transition countries of the Western Balkans are in suboptimal levels as a result of numerous deficits and economic and social problems, lack of voluminous local and foreign investment and significant delays in the implementation of economic and institutional reforms as a result of lack of national political consensus. 6 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans Delays and poor quality of structural reforms still remain as the major obstacles in attracting foreign investment although as serious progress was made in terms of creating a more favorable environment business largely of formal nature. As a consequence, that indicator “Ease of Doing Business” does not include areas such as: the level of corruption, independence of the judiciary, the size of the market, political and economic risk and functionality of public institutions, this indicator does not reflect the full attractiveness of business environement as crutial precondition in attracting foreign direct investment. Despite the fact that Macedonia on the basis of the indicator, Doing Business, in the period 2010-2015 is listed as a leader in the West Balkans, country has realized the lowest level of foreign direct investment in volume and quality compared to the West Balkans and EU countries. Due to the low level of foreign direct investment, the lack of national investment, the hesitation of the banking sector in financing new investments as a result of the growth of bad loans and considerable reduction of economic remittances Macedonia remains as the country with the highes level of unemployment and poverty in Europe. The research aims to analyze the correlation between the level of ranking of countries according to the indicator, Doing Business, and the level of foreign direct investments in countries such as Croatia and Bulgaria that are part of the EU and the countries aspiring to join the EU with special emphasis in the case of the Republic of Macedonia. The importance of correlation between the quality of business environment and attraction of foreign direct investment is linked closely with the aspiration of the countries of West Balkans for integration into the EU as a precondition have the fulfillment of the Maastricht and Copenhagen criteria. These criteria aim of improving the business environment, attracting foreign investment, creating a functional market economy as a prerequisite for a qualitative integration of the economies of the West Balkans into the largest market of the EU. Volume 6 Number 1 Spring 2016 7 �Rufi Osmani Literature Review Rich literature exists on the field of doing business and on the field of foreign direct invesment. The "Doing Business" website reports more than 100 academic papers in 50 academic journals, as of December 2014. However, only two papers have examined the Ease of Doing Business indicator and its correlation with foreign direct invesment in the ex-socialist countries in Westren Balkan (Petreski & Jovanovic2014). Petreski is focused on the growth aspecst of the ease of doing business, in 30 exsocialist countries, for the period 2005-2011. Petreski’s paper titled Regulatory Environment and Development Outcomes: Empirical Evidence from Transition Economies, measures the ease of doing business by the aggregate index and by the 10 sub-indices. The study of Jovanovic “Ease of doing business and FDI in the Ex–socialist countries” investigates the ease of doing business, measured through the Doing Business indicators of the World Bank, and aspects of foreign direct investment in 27 ex-socialist countries. Results point out that there is a lot of uncertainty regarding the effects, with most of the indicators being either insignificant or lacking robustness. It also seems that investors are discouraged by bureaucracy, because four of the five indicators that are significant in either of the estimations refer to bureaucratic impediments, not to financial cost (Jovanovic & Jovanovic, 2014). Research Methodology In order to meet the set objectives of this paper, that is to determine correlation between the ranking of the countries of the Western Balkans by indicator, Doing Business, and the level of realized foreign direct investment. The timeframe for the research is 2007-2013 including the following countries: The Republic of Macedonia (MKD), The Republic of Albania (ALB), the Republic of Kosovo (RKS), Montenegro (MNE), Bosnia and Herzegovina (BIH), Serbia (SRB), Croatia (CR) Bulgaria (BG), the average of West Balkan and the average of European Union countries (EU27). 8 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans By using common statistical and descriptive methods we provide a proper empirical and comparative analysis of the process of improving the business environment, the realization of foreign direct investment and remittances among these countries and compared to the EU27 averages. Structural Elements of the Doing Business Indicator The Doing Business Indicator of the World Bank includes 11 areas based on standard methodology with the objective of measuring the attractiveness of the business environment in 189 countries worldwide. Table 1: Structural Elements of Doing business, Structural elements of ,,Doing business,, I.Complexity and cost of regulatory processes 1.Starting a business 2.Dealing with permits 3.Getting electricity construction 4.Registering property 5.Paying taxes 6.Trading across borders II.Strength of legal institutions 7.Getting credit 8.Protecting minority investors 9.Enforcing contracts 10.Resolving insolvency 11.Labor market regulation Eleven areas of business regulation Six areas of business regulation Procedures, time, cost and paid-in minimum capital to start a limited liability company Procedures, time and cost to complete all formalities to build a warehouse Procedures, time and cost to get connected to the electrical grid Procedures, time and cost to transfer property Payment, time and total tax rate for a firm to comply with all tax regulations Documents, time and cost to export and import by seaport Five areas of business regulation Movable collateral laws and credit information systems Minority shareholders right in related - party transactions and in corporate governance Procedures, time and cost to resolve a commercial dispute Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the insolvency legal framework Flexibility in employment regulation, benefits for works and labor dispute resolution Source: World Bank group, Doing Business 2015, Going Beyond Efficiency, 12th edition. Volume 6 Number 1 Spring 2016 9 �Rufi Osmani In the framework of the many areas assessed by Doing Business, two are key structural elements: the complexity of the legislation and the cost of making business; and the strengthening of legal institutions in the function of doing business. Doing Business, integrates 11 business areas that manifest the complexity and cost of regulatory processes and the area of strengthening the legal institutions in the function of improving the business environment. It should be emphasized that despite the fact that indicator “Doing Business” includes a representative number of regulations of business fields, in different contries the importance of the specific criteria directly depends on the level of economic and social development, functionality of institutions and courts in particular, the level of corruption, organization of trade unions and political and social stability of the country. Western Balkan countries with weak public institutions have many institutional problems that reflect negative effects on the attractiveness of the business environment and in attracting investment in general and foreign direct investment in particular. Within the 11 criteria assessed by the Doing Business indicator, there is a high level of asymmetry in some structural elements such as: permits for construction, registration of property, enforcement of contracts, payment of taxes, protection of the minority shareholders, market regulations, quality of labor force and the minimum wage paid. Asymmetric Business Environment in the Capitals of the Western Balkan Countries Analysis of key criteria of doing business in terms of starting a business, obtaining the construction permit, registration of property and execution of contracts in the capitals of the countries of BP argues highly asymmetric business environments of the analysed countries. 10 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans Table 2: City Differences: A Comparative Analysis of WB Capitals Description Starting a Business Dealing with constr. Permits Register property Enforcing contracts Procedures (number) Time (days) Cost (% of income per capita) Paid-in min. capital (% of income per capita) Procedures (number) Time (days) Cost (% of wareh.value) Procedures (number) Time (days) Cost (% of property value) Time (days) Cost (% of claim) Procedures (number) Belgrade Podgorica Prishtina Sarajevo Skopje Tirana 7 13 7 10 10 58 12 50 3 3 5 5 8 2 29 15 3 31 6 0 112 30.5 0 21 18 21 19 15 349 1,782 287 2,132 320 856 182 1,166 129 1,792 0 no practice no practice no practice 6 91 7 71 8 33 7 33 5 58 6 33 2.7 635 3.1 545 0.6 420 5.3 595 3.1 370 3.4 390 29 26 61.2 40.4 33 36 36 49 53 37 37 39 Source: Author’s own calculations based on World Bank: Doing Business. The capital of Macedonia (Skopje) is the place where most functional economic areas are concentrated and represents the most attractive business environment compared with other capitals of West Balkan countries. Skopje has an edident administrative advantage of 50% for doing business compared with other Balkan capitals, Podgorica (Montenegro) is second accompanied by the Volume 6 Number 1 Spring 2016 11 �Rufi Osmani Kosovo capital Pristina, while Sarajevo (BiH) and Tirana (AL) are capitals which are characterized by significant administrative barriers and bureaucracy. Ranking of Countries of the WB and the EU on the Basis of the Indicator of the World Bank “Doing Business” Data published by the World Bank for the period 2007-2013 show a business environment with trends of improvement in all the countries of the Western Balkans with the exception of Bosnia and Herzegovina, the country in which the business environment marked a fall in 16 places compared with the previous analysed period. Table 3. A comparative Analysis of Ranking of Countries of WB (2007-2013) Countries 2007 2008 2009 2010 2011 2012 2013 Macedonia 93 79 69 32 38 22 23 Montenegro 72 80 77 71 66 56 51 Bulgaria 47 44 42 44 51 59 66 Croatia 116 105 110 103 84 80 84 Albania 132 136 89 82 82 82 85 Serbia 83 91 90 88 89 92 86 Kosovo Bosna and Herzegovina - - 107 113 119 117 98 110 118 119 116 110 125 126 Average for WB 82 82 88 81 80 79 77 Source: Author’s own calculations based on World Bank, Doing Business. Analysis of Doing Busness, for the period 2007-2013 shows quite asymmetric positive trends in the countries analyzed except Bosna and Herzegovina, the country in which the business environment has deteriorated compared with 2007. Greater improvement of business environment has highlighted Macedonia progressing for 70 places and ranging in the position 23rd worldwide. Many institutional reforms made in terms of reducing the cost of doing business, reducing the bureaucratic procedures, facilities in the labor market, putting into function of real estate market, increasing the efficiency of executions in contested proceedings, the tax cuts and investment in infrastructure funded by the government of the country in function of attracting FDI contributed to the improvement of the business environment in the period (2010-2015) in the case of Macedonia. 12 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans Macedonia is accompanied by Montenegro in the 51st, Bulgaria in the 66th and then followed by other countries of WB; Bosnia and Herzegovina is ranked at the bottom of the WB countries in terms of business attractiveness. Two EU member countries of the Western Balkans (Bulgaria and Croatia) have highlighted asymmetric trends in terms of business attractiveness despite the fact that during the process of EU integration by fulfilling the Copenhagen criteria the two countries have implemented deep institutional reforms with the objective of creating a functioning market economy supported by functioning institutions. The slow progress of Kosovo in the sense of creating attractive business environment is addressed mainly to political and security risks as a result of the contestation of independence from neighboring Serbia and the fact that the local Serb population has created protected area of the informal economy, smuggling and tax evasion that is out of control of the legal government of Kosovo. The reasons for a low ranking of BiH are mainly political in nature as a result of political instability and numerous political risks and security risks that directly affect the creation of aversion of investors for investing in the country where institutional guarantees are minimal for protection and development of business as a result of permanent conflicts between institutions of local, regional and central levels. Figure 1. Ease of Doing Business: A Comparative Analysis of some countries of WB (2105) 76 73,35 74,11 71,8 74 72 70 66,68 66,53 68 66 64 62 EU Average Macedonia (WB) WB Average Bulgaria (UE) Croatia (UE) Source: Author’s own calculations based on World Bank, Doing Business. Volume 6 Number 1 Spring 2016 13 �Rufi Osmani Assessment made on the basis of Ease of Doing Business by the World Bank and reflected in Figure 1 highlights a minimal difference of 2.3 points advantage of Macedonia in relation with Bulgaria despite the fact that based on the same criteria Macedonia is ranked 43 places higher. Assessment made on the basis of the Ease of Doing Business criteria, for 2015 substantially cancels ranking based on the indicator, Doing Business, and imposes the need for a harmonized structure of both indicators in function of objective reflecting the real attractiveness of the business environment and the ranking of the countries analyzed. The particularity of this ranking lies in the fact that there is a substantial difference in the level of ranking for different countries of the Western Balkans despite the fact that all governments of the analyzed countries are implementing similar policies with the objective of attracting foreign direct investment in the sense of tax level, fiscal facilities, elimination of the of bureaucracy and reducing business costs and other bareers for foreign investors. The Trend and the Level of FDI in the Countries of the Western Balkans There are promising trends in global foreign direct investment (FDI) flows for developing and transition economies. Each year more and more FDI is flowing not only from developed into developing economies but also from one developing or transition economy to another. Indeed, developing and transition economies’share of global FDI inflows rose from roughly 19 percent in 2000 to 52 percent in 2010—for the first time exceeding half the total. And half the top 20 FDI recipients in 2010 were developing or transition economies (Hornberger et al, 2011). This improvement in principle addresses the improvement of business environment, lower business cost and taxes and elimination of administrative and bureaucratic barriers in countries in transition. Analysis of the trend and volume of foreign direct investment realized in the period 2007-2013 in the Western Balkan countries shows opposite trends compared to the trend observed by the report of the World Bank in the period 2000-2010. 14 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans Table 4: The FDI ($) in the Western Balkan’s (2007-2013) (milions $) Countries Croatia Serbia Bulgaria Albania Montenegro Bosna&Herzegovina Kosovo Macedonia Average of WB 2007 4947 3432 1387 652 937 1804 603 733 1812 2008 5812 2996 1030 1240 975 1005 537 612 1776 2009 3400 1935 3897 1343 1549 1385 408 259 1772 2010 845 1340 1867 1089 758 444 487 300 891 2011 1242 2700 2124 1049 556 469 546 495 1148 2012 1336 3553 1578 920 618 350 293 283 1116 2013 588 1377 1888 1478 446 322 343 376 852 Source: Author’s own calculations based on IMF and World Bank reports. Analysis of the trend of foreign investments in the countries of WB has been heavily influenced by the world financial crisis which consequently produced substantial decreasing of FDI. In the WB in 2007 were realized in total FDI $ 12.684 million, while in 2013 the FDI were realized at the level of $ 5.694 million, that represents a decrease of $ 6.990 million a fact which demonstrates a negative trend and decrease of the interest of foreigner’s investors for investing in a region identified as high-risk political with fragile and corrupted institutions. Table 5. FDI in Countries of Western Balkan (2007-2013) (millions $) Country Croatia Serbia Bulgaria Albania Montenegro Bosnia and Herzegovina Kosovo Macedonia Average for WB Total FDI 18.172 17.332 13.832 7.770 5.838 5.775 3.213 3.052 9.373 Average FDI 2.596 2.476 1.976 1.110 834 825 459 436 1.339 Source: Author’s own calculations based on IMF and World Bank reports. Based on the analysis of the volume of realized FDI in WB countries in the period 2007-2013 Croatia ranked first with a total of 18.172 million US dollars of FDI accompanied by Serbia and Bulgaria $ 17.332 million with $ 13.832 million. Volume 6 Number 1 Spring 2016 15 �Rufi Osmani Despite the fact that Croatia has achieved the highest level of cumulative FDI, investments carried out in this country in 2013 were at level of 10% of FDI realized in 2008 that argues a very high negative trend which is characteristic for all countries of WB and it can not be explained only by using the financial crisis as an aliby. The trend of decreasement of investment is characteristic of all countries of WB without exception with high negative effects at the countries with the lowest level of economic development (Kosovo, Bosnia and Herzegovina and Macedonia) ,the countries that are suffering from the syndrome of low investment , high unemployment and poverty in WB and in Europe. Figure 2: Foreign Direct Investment – per capita ($) (2007-2013) 3000 2582 2500 2000 1500 1625 1562 1263 1000 500 0 587 291 581 349 2007 2008 658 343 143 123 2009 2010 927 1030 350 236 328 135 2011 2012 743 277 179 2013 Albania Bosna Bulgaria Croatia Kosovo Macedonia Montenegro Serbia Average for WB Linear (Bosna) Source: Author’s own calculations based on IMF and World Bank reports. The comparative analysis of FDI per capita in the countries of WB reflects very low levels of FDI of all countries with the exception of Montenegro. FDI per capita despite the negative trend continue to be several times over the average of countries of WB as a result of the fact that this country has only half a million residents who live in this country. 16 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans While in the case of Bosnia & Herzegovina and Kosovo the political and security reasons that produce large risks for serious foreign direct investment, in the case of Macedonia we have a paradoxical phenomenon of very high level of ranking of this country based on indicator, Doing Business, and very low level of FDI. The Trend and the Level of Remittances in the Countries of the Western Balkans The level and trend of remittances in the countries of the Western Balkans is in direct dependency on the number of economic migrants. On the basis of financial flows leads Serbia with over $ 4.3 billion as a result of the fact that it is the country with the largest number of population and emigrants in WB. Table 6: Remittances in the Western Balkan’s (in millions $US) Country Albania Bulgaria Bosnia and Herzegovina Croatia Montenegro Serbia Average for WB 2010 779 1.611 1.895 1.500 357 4.357 1.508 2013 1.156 1.331 1.822 1.213 300 4.345 1.558 Source: Author’s own calculations based on IMF and World Bank reports. The highest level of economic remittances compared to FDI despite the fact that the authorities of the countries of the WB do not provide economic and fiscal facilities, needs to be in focus of economic policies in the future as an important opportunity for investment and economic development. Low Level of FDI despite Attractive Business Environment in Macedonia In the analyzed period (2007-2013) Macedonia has had serious progress in improving the business environment. In 2014 Macedonia was ranked as the leader of WB countries (23 worldvide), a fact that requires a special analysis having in mind that this progress did not produce positive trends of FDI. Volume 6 Number 1 Spring 2016 17 �Rufi Osmani Table 7. WB Ranking: A Comparative Analysis of WB Average, Macedonia and Croatia Countries Macedonia Croatia WB Average 2007 93 116 82 2008 79 105 82 2009 69 110 88 2010 32 103 81 2011 38 84 80 2012 22 80 79 2013 23 84 77 Source: Author’s own calculations based on World Bank reports. Analysis of the level of realized FDI in comparison with economic remittances and set in correlation with ranking of countries of WB based on Doing Business reflects large discrepancies. The low level of realized FDI in Macedonia denies positive correlation between FDI and the ranking of attractiveness of the business environment. This asymmetry is quite large in the case of Macedonia; this country is ranked as a leader in terms of business attractiveness while at the level of FDI has realized the lowest level of FDI. Table 8. FDI: A Comparative Analysis of WB Average, Macedonia and Croatia 2007 2008 2009 2010 2011 2012 2013 Average 2007-2013 WB Average 1812 1776 1772 891 1148 1116 852 1339 Macedonia 733 612 259 300 495 283 376 436 Croatia 4947 5812 3400 845 1242 1336 588 2596 Countries Source: Author’s own calculations based on IFM and World Bank reports. In a research made by Osmani and Deari (2009) regarding the measurement of political, economic and financial risk in Macedonia it is concluded that the majority of businessmen have serious remarks on: poor quality of public administration, huge policy influence on functioning of the judicial system, high level of corruption and implementation of fiscal selective controls by fiscal authority. This low level of FDI reached in Macedonia is quite symptomatic taking into account the fact that the law for free economic zones in Macedonia ofer numerous fiscal, administrative and infrastructure convenience for foreigner investitors. The law on free economic zones of Macedonia provides numerous facilities for foreign companies that decide to invest in Macedonia. These foreign companies are 18 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans obligated to the period of 2-10 years to export at least 50-70% of total production realized in free economic zones as a prerequisite for exploiting the numerous benefits of fiscal and infrastructure. Foreign investors in the framework of free economic zones if export 70% of total production are released in a period of 10 years from the payment of corporate income tax, property tax and sales tax within the economic zone. Foreign companies that invest in economic zones can buy the building land or industrial land with a symbolic price (of 1 euro per m2). A great facility for business in free economic zones is the fact that at major economic areas of the country the government has invested in the construction of basic infrastructure for full functionality of economic free zones. A survey done by business investment office of the Austria (Schlattl, 2013) in Skopje pointed out these concerns which directly affect the low level of foreign investments in Macedonia: Reduction of bureaucracy with 69%, the legal security of investments by 66%, improved infrastructure with 57%, fighting corruption by 47%, delays in EU integration and political instability with 45%. Figure 3: What are Requirements of Business Community from the Macedonian Government Reduction of Bureaucracy Legal Security, Investor Confidence Improvement of Infrastructure Fight against Corruption More Initiatives for the EU Accession Transparent and simple Tax Laws Political Stability Access to Financial Funds Modernization of Labor Law Stable Currency Other, please specify… 69% 66% 53% 47% 44% 38% 38% 28% 25% 22% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: Author’s own calculations. Volume 6 Number 1 Spring 2016 19 �Rufi Osmani The report of EBRD 2014, survey done with managers of 15,500 companies who work in 29 countries mainly in Eastern Europe emphasizes the main problems as: the informal economy and tax evasion, difficult access to finance for private companies, unequal treatment of tax administration and other administrative bareers. The transition experience from centrally planned to market economy is an historically unprecendented process (WB Report), and that process is not finished in many contries in Eastern Europe and Former Soviet Union. In the context of an unprecedented process of political and economic transition that the countries of WB have undergone, it is possible to have unprecedented results, in one side significantly improving of the business environment and in other side very low levels of FDI, as is the case of Macedonia. Conclusions The Western Balkan countries in a permanent cooperation with the IMF, the World Bank, and during the integration process in the EU have implemented many institutional reforms as a function of preserving economic stability and creating suitable business climate as a precondition for dynamic economic development. Implementing permanent economic and political reforms by the Western Balkan countries have resulted to formal improvements of their business climate measured by the World Bank ”Doing Business” indicator. Despite the improvement of business climate of the Western Balkan countries, this positive trend of business climate has not been accompanied by an increase of investments in general and FDI in particular. In this direction, Macedonia is a paradoxical case because the country is ranked as 23rd at the global level for suitable business climate but it has the lowest level of FDI among the Western Balkans countries. The lack of positive correlation between ”Doing Business” and the level of FDI in the case of the Western Balkan countries signals the need for structural modification of this indicator with more qualitative elements concerning the real functionality of the institutions that directly affect the business climate. 20 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans Despite the low fiscal burden and numerous investing easiness of doing business provided to foreign investors there is still a low level of FDI in the Western Balkan countries which is due to the fact that these countries are characterized by high levels of informal sector and tax evasion, bureaucratic procedures, politicization of public institutions and volatility of public institutions. Improvements in this area are the main investing and developing challenges for all governments of the countries of Western Balkan without any exclusion. A faster integration of all Western Balkan countries in NATO and the quality fulfillment of the criteria of Maastricht and Copenhagen in the process of integration to EU are substantial prerequisites for minimizing the political and security risks especially in the case of Kosovo, Bosna and Herzegovina and Macedonia which are prerequisites for improving the business climate and realizing more FDI in all the Western Balkan countries as a common economic and investment market. References Agency for foreign investment in Macedonia (2010-2014). Invest in Macedonia. The annual report for period 2010-2014, Skopje Anderson , J. & Gonzalez, A. (2013). Does Doing Business matter for FDI in Doing Business: Smarter Regulations for Small and Medium-Size Enterprises, World Bank Paper, 45-50. Cass, F. (2007). Attracting FDI to transition countries: The use of incentives and promotion agencies.Transnational Corporations, Vol.16, No.02, 1-46. Commander,S (1991). Managing Inflation in Socialist Economies in Transition , Economic Devolopment Institute, The World Bank Paper, Washington, DC. Demekas, D.G.,Horvath, B., Elina Ribakova & Wu, Y. (2007). Foreign direct investment in European transition economies. The role of policies, Journal of Comparative Economics, Vol.35 (2),370-386. Gerhard Schlattl (2014) ”Business Climate Survey Macedonia”, Austria’s Business Voice in Macedonia, No.3, Institut Adventage Austria,1-18, Skopje. Volume 6 Number 1 Spring 2016 21 �Rufi Osmani H.J. Blanke, University of Erfurt, Erfurt, Germany; S. Mangiameli, ISSIRFA CNR, The Treaty on European Union (TEU), Rome. Incentives and Investments (2010). Evidence and Policy Implications. FIAS, DC McKinsey Global Institute, World Bank Group, Washington DC. Jane Bogoev, Sultanija Bojceva Terzijan, Balázs Égert and Magdalena Petrovska (2008). Real Exchange Rate Dynamics in Macedonia: Old Wisdoms and New Insights. Economics: The Open-Access, Open-Assessment E-Journal, 2, 2008-2018. Jayasuriya, D. (2011). Improvements in the World Banks Ease of Doing Business Rankings: Do they translate into Greater Foreign Direct Investment Inflows? Policy research working paper,57-87. Jovanovic, B (2014). Easy of doing business and FDI in the Ex–socialist countries, NBRM paper, 1-32. Skopje. Osmani & Deari (2009) Economic Transition and the effects of tax reform on FDI: The Case of Macedonia. In Universum Journal, Scientific Journal for Economic and Social Issues, Universum University – Institute for Research and Consulting-IRC, 17- 41. Osmani & Mazllami (2014). A challenging path toward the UE: The fulfillment of the Maastriht Criteria in the case of Macedonia and Albania in Regional Economic Development, IBU,Vol.9/2014, 327-339. Osmani & Mazllami (2014). The impact of fiscal decentralization process in the local public finance in the Western Balkan countries: A comparative analyzis. Journal of International Scientific Publications, Vol.9, 730 -741. Petreski, M (2014). Regulatory Environment and Development Outcomes: Empirical Evidence from Transition Economies, NBRM paper, 1-15. Skopje. The IMF (2007-2014). Annual report for FYR of Macedonia for period (20072014), Washington DC. The ministry of Justice of Republic of Macedonia (1999). The low of free economic zones. Sl.V.RM 56/99,41/100, Skopje. 22 Journal of Economic and Social Studies �Improved Business Climate and FDI in the Western Balkans The National Bank of Republic of Macedonia (2007-2014), Annual report of NBRM for period 2007-2014, Skopje. The World Bank Group (2010-2015). Doing business, Going Beyond efficiency, Comparing Bussines Regulation For Domestic Firms In Economies of 189 Countries, A World Bank Group, Washington, DC. UNCTAD (2010). World Investment Report 2010: Investing in a Low-Carbon Economy. Volume 6 Number 1 Spring 2016 23 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 2971 Title A name given to the resource Improved Business Climate and FDI in the Western Balkans Author Author OSMANI, Rufi Abstract A summary of the resource. Abstract: The process of economical and political transition in the Western Balkans, up to this point has shown a high correlation between achieved economical results and the determination of national authorities for drawing and implementing policies for economical stabilization and development as well as structural reforms with the support of the International Monetary Fund, the World Bank and other relevant international institutions. The analyzed countries from the Western Balkans region have managed to achieve appropriate levels of macroeconomic stability and an improvement of the business climate due to the implemented reforms, these countries have not been successful enough in attracting Foreign Direct Investments as a precondition to ensure a more dynamic economical development and an appropriate fall in the level of unemployment and poverty. A comparative analysis of the real economic indicators of the Western Balkans countries as contracted to the EU average shows that these countries are well under the real convergence levels of the EU countries. The main objective of the paper is to provide some additional arguments regarding the potential positive or negative correlation between the business climate and the levels of Foreign Direct Investments in the Western Balkans countries, some of which are already members of the EU and others aspiring to become members in the future, having in mind the asymmetric economic positions of the countries being analyzed. Keywords: Business climate, Structural reforms, Foreign Direct Investment, Economic Development, Western Balkan countries, European Union JEL Classification: E3, E4, F15, F21, M21, M48, O10, O11, O12 Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Article PeerReviewed DOI Digital object identifier doi: http://dx.doi.org/10.14706/JECOSS16611 Identifier An unambiguous reference to the resource within a given context ISSN 1986 – 8502, HB Economic Theory https://omeka.ibu.edu.ba/files/original/d1f78ed2a7af5fa18eee4e173f429510.pdf 0d33849cd15be6c0298c903ea3e61a70 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Improvement of Corporate Governance Practices of İstanbul Stock Exchange (ISE) Corporate Governance Index Companies Evren Dilek Sengur İstanbul University, İstanbul, Turkey sengur@İstanbul.edu.tr A series of corporate scandals highlighted the corporate governance issue all around the world. Like other countries, Turkey has adopted strong regulatory framework for corporate governance in the last decade. The purpose of this study is to analyze the improvement in corporate governance practices of İstanbul Stock Exchange Corporate Governance Index Companies between the years of 2007 and 2012. With this purpose corporate governance rating reports of companies were examined. Based on the examination of corporate governance rating reports; it is observed that overall corporate governance ratings have been gradually increasing year by year. Further analysis demonstrates that while stakeholders section is the most strength side, board of directors is the weakest part of Corporate Governance Index Companies. Nonetheless, in 2012 a sharp increase in the ratings of board of directors section was observed thanks to enactment of new Commercial Code and enforcement of Communiqué Serial : IV, No:56. Keywords: Corporate Governance, Corporate Governance Index, Corporate Governance Rating, İstanbul Stock Exchange, Capital Market Board of Turkey. 111 � https://omeka.ibu.edu.ba/files/original/b98c6525cad08d8adcf22aa2641ba640.docx c1df6bbead45ad1a0dd5623ea5887c31 https://omeka.ibu.edu.ba/files/original/52a54baa98640e32bae29d00c19acfdf.pdf ff72614246d5149fb9d97aa07414b757 PDF Text Text International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Improvement of Corporate Governance Practices of İstanbul Stock Exchange (ISE) Corporate Governance Index Companies Evren Dilek Sengur İstanbul University, İstanbul, Turkey sengur@İstanbul.edu.tr Abstract A series of corporate scandals highlighted the corporate governance issue all around the world. Like other countries, Turkey has adopted strong regulatory framework for corporate governance in the last decade. The purpose of this study is to analyze the improvement in corporate governance practices of Istanbul Stock Exchange Corporate Governance Index Companies between the years of 2007 and 2012. With this purpose corporate governance rating reports of companies were examined. Based on the examination of corporate governance rating reports; it is observed that overall corporate governance ratings have been gradually increasing year by year. Further analysis demonstrates that while stakeholders section is the most strength side, board of directors is the weakest part of Corporate Governance Index Companies. Nonetheless, in 2012 a sharp increase in the ratings of board of directors section was observed thanks to enactment of new Commercial Code and enforcement of Communiqué Serial : IV, No:56. Keywords: Corporate Governance, Corporate Governance Index, Corporate Governance Rating, Istanbul Stock Exchange, Capital Market Board of Turkey. INTRODUCTION After a series of corporate scandals, the importance of transparency issues have increased and corporate governance has became one of the most fundamental themes for business environment. These developments have fostered widespread belief in the economic benefits of companies having more responsibility against all beneficiaries including employees, directors, shareholders, stakeholders, customers, suppliers, and the society as a whole (Yuksel, 2008). As a consequence of such developments, corporate governance principles are enacted by many countries to minimize the agencyproblem and ensure that managers act in the interests of shareholders. In addition to being a potential solution to principal-agent problem, well defined and functioning corporate governance system helps a firm to attract investment, raise funds with a low capital cost, strengthen firm performance, overcome financial crisis more easily and generate long term economic value for its shareholders. From the perspective of national development, effective corporate governance system is also essential for development of equity markets. Additionally, corporate governance leads a sustainable growth and enables companies to compete effectively in global marketplace and attract long-term capital to grow their businesses (Ararat and Ugur, 2003). The purpose of this paper is to analyze the improvements of Istanbul Stock Exchange (ISE) Corporate Governance Index Companies with respect to compliance with Corporate Governance Principles of Capital Markets Board of Turkey between 2007 and 2012. In order to demonstrate the improvement level of compliance, corporate governance rating 205 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo reports of companies which are listed on Corporate Governance Index of Istanbul Stock Exchange were examined. The analysis comprises corporate governance rating reports between the years of 2007 and 2012 to monitor the evaluation of corporate governance practices. Corporate governance rating reports of Istanbul Stock Exchange (ISE) Corporate Governance Index Companies have examined by Toraman and Abdioğlu in 2008 (Toraman and Abdioğlu, 2008), however this study is different from previous study by highlighting the improvements in the compliance degree of companies between 2007 and 2012. In this study the next section summarizes the literature review, section 2 briefly explains the development of corporate governance in Turkey, section 3 reviews research methodology and findings regarding corporate governance practices of ISE Corporate Governance Index companies. The study ends with summary, concluding remarks and recommendation for future research. 1. LITERATURE REVIEW Review of literature on corporate governance in Turkey indicates that some of the previous studies cover the development of corporate governance in Turkey. (Ararat and Ugur 2003; Ararat and Yurtoglu 2006; Yuksel 2008; Akdogan and Boyacioğlu 2010; Akdogan and Akdogan 2011; Akbulak 2011). Furthermore, Arsoy and Crowther (2008) investigated the extent of convergence of regulations and practice regarding corporate governance between Turkey and UK. They found that although corporate governance code of Turkey and UK are similar, the degree of compliance is higher for UK companies. Toraman and Abdioglu (2008) examined corporate governance rating reports of ISE Corporate Governance Index companies and they observed most powerful corporate governance practices at the stakeholders section, and the weakest corporate governance practices at the board of directors section. Mandacı and Gumus (2010) examined the effects of ownership concentration and managerial ownership on the profitability and the value of non-financial firms listed on the Istanbul Stock Exchange (ISE). They found that ownership concentration has a significantly positive effect on both firm value and profitability, while managerial ownership has a significant negative effect on firm value. Gurbuz et al. (2010) evaluated the impact of corporate governance on financial performance of companies in Turkey. They found that corporate governance practices enhance firm financial performance. Sakarya (2011) and Ergin (2012) analyzed the relationship between corporate governance rating and the return on common stocks. Both of the studies demonstrated that there is a positive correlation between the announcement of a favorable corporate governance rating score and the associated stock returns. Sengur (2011) examined whether properly implementation of corporate governance principles make difference in performance of companies in Turkey. The results of her study showed that there is no significant difference in performance of Corporate Governance Index Companies in Turkey when performance is measured in terms of ROA and Tobin Q. In their study Needles et al. (2012) concluded that Turkish high performance companies apply superior corporate governance practices in comparison to ordinary Turkish companies. 206 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 2. DEVELOPMENT OF CORPORATE GOVERNANCE IN TURKEY In recent macroeconomic restructuring efforts of Turkey, Turkey has been adoptedstrong regulatory framework for corporate governance in the last decade. As a starting point for the implementation of best practices in corporate governance, in 2002 Turkish Industry & Business Association (TUSIAD) published a report entitled “Corporate Governance Code of Best Practices: Composition and Functioning of the Board of Directors.” Code of best practices introduced by TUSIAD comprised of voluntary principles with the aim of providing a guideline for corporations. Within the scope of its mission, in July 2003 Capital Market Board of Turkey (CMB) issued the Corporate Governance Principles of Turkey with the purpose of enhancing the corporate governance regulations for listed companies. CMB principles were established mainly in accordance with OECD Corporate Governance Principles. Additionally, CMB took into consideration the particular conditions of Turkey during the preparations stage of principles. Parallel to OECD principles, CMB Corporate Governance Principles were revised in 2005. The CMB principles are based on the principle of “comply or explain”. In other words, the implementation of the principles is optional and companies should disclose the extent of compliance and explain the reasons why some of the principles are not adopted. The implementation status of the principles should be disclosed in corporate governance compliance report that is included in the annual report as a separate section. In 2003, Corporate Governance Association of Turkey (TKYD) was founded with the aim of disseminating best practices of corporate governance. Since its foundation, TKYD has been conducting academic research projects to determine strategic priorities in Turkey with respect to corporate governance. A research project, “Governance Map of Turkey” was conducted in 2005 and indicated that boards’ excessive involvement in execution and insufficientdisclosure are the main issues in Turkish corporate world. In February 2005 Istanbul Stock Exchange (ISE) published the rules of Corporate Governance Index. ISE Corporate Governance Index has been active since August 31, 2007 and it aims to measure the price and return performances of ISE-listed companies with a corporate governance rating of minimum 7 out of 10. The corporate governance rating is determined by the rating institutions that are approved by CMB.CMB regulates principles of rating institutions under the Communiqué on Principles Regarding Ratings and Agencies (Seria: VIII, No: 51). Corporate governance rating of a company is granted upon the request of these companies and Corporate Governance Rating Reports are published by the rating agencies. Four national and one international rating institutions are permitted to rate the corporate governance practices of the companies in Turkey. These institutions are shown in Table 1. Table 1 Corporate Governance Rating Institutions Rating Institutions National Turkish Credit Rating National Saha Corporate Governance and Credit Rating Services Inc. National Kobirate Corporate Governance and Credit Rating Services Inc. National JCR Eurasia Rating International RiskMetrics Group Inc. Source:Capital Markets Board of Turkey, http://www.spk.gov.tr/indexcont.aspx?action=showpage&showmenu=yes&menuid=6&pid=10&subid=1&submenuheade r=10 207 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Under Decree Law No. 654 (Official Gazette: October 11, 2011, No:28081) the following paragraph was added to Capital Market Law in order to extend the functions of Capital Markets Board of Turkey : “to determine and announce the principles of corporate governance in the capital market, to oblige the public joint stock companies quoted in the stock exchange market totally or partially comply with the principles of corporate governance in accordance with the groups determined by taking (i) the free float rates, (ii) the number and the quality of these companies’ investors and (iii) the index which companies are subjected to and their transaction volume in a certain time zone into account so as to make a contribution to the improvement of investment environment”. With this paragraph, the Capital Markets Board of Turkey (CMB) has been authorized to determine corporate governance principles and to oblige the public joint stock companies comply with the principles. Capital Market Board published the Communiqué Serial: IV, No: 54 Principles Regarding Determination and Application of Corporate Governance Principles on 11.10.2011. The Communiqué introduced the obligation for Istanbul Stock Exchange (ISE) National-30 Index companies (excluding banks) to comply with some of the corporate governance principles. Afterwards the Communiqué Serial: IV, No: 56 Principles Regarding Determination and Application of Corporate Governance Principles replacing the Communiqué Serial: IV, No: 54 was published on 30.12.2011. With this new Communiqué the scope of application of the previous Communiqué which covered ISE National-30 Index companies (excluding banks) has been enlarged to include other companies traded on the Istanbul Stock Exchange. However, companies trading on Watch List Market and Developing Companies Market are exempted from mandatory implementation of Corporate Governance Principles. By the Communiqué Serial: IV, No: 56, the public joint stock companies that are quoted in the Istanbul Stock Exchange (ISE) were divided systematically into three groups by taking into account of their market values and the market values of their shares in circulation. Each categories are required to obey different level of mandatory rules. Under the Communiqué, Category 1 companies are required to comply with all mandatory Corporate Governance Principles while Category 2 and Category 3 companies may benefit from certain exemptions. The principles of corporate governance that was published by Capital Market Board of Turkey in 2003 aimed to contribute all joint stock companies in the private and public sector. Compliance to the principles was not compulsory. Communiqué Serial: IV, No: 56 was published with the aim to expand the application of corporate governance principles and to oblige the public joint stock companies comply with the principles. Through this Communiqué, one step forward was taken regarding the approach of “comply or explain” that has been adopted by Capital Market Board of Turkey since 2003 about corporate governance. The provisions of Communiqué Serial: IV, No: 56 are valid for Istanbul Stock Exchange (ISE) Companies (excluding listed banks) from the date of publication of the Communiqué on 30.12.2011. For listed banks, Communiqué will be effective on 30.12.2012. 208 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Two major legislations comprise the legal framework of the Turkish capital markets; Capital Markets Law (CML) and Turkish Commercial Code. Turkish Commercial Code basically governs commercial relationships and establishment and governance of companies. On February 14, 2011 the new Turkish Commercial Code was published in the official gazette and came into force on July 1, 2012. In the European Union (EU) integration process of Turkey, the code mainly aims to harmonize the Turkish Commercial Code with European legislation system. Provisions set forth in the Turkish Commercial Code aims to regulate commercial relations in accordance with the recent changes in the local and global business environment. The Code concerns social responsibility of the companies and take corporate ethical standards into consideration. The corporate governance approach of the Code is based on four pillars: transparency, fairness, accountability and responsibility. The Code accepts the single shareholder joint stock company and single member partner limited liability company. The Code allows the board meetings and general assembly meetings to be held in electronic media. The Board of Directors is responsible for the preparation of the financial statements in conformity with the Turkish Financial Reporting Standards which are identical with International Financial Reporting Standards (IFRS). The audit is required to be performed in accordance with Turkish Auditing Standards which are identical with International Auditing Standards (ISAs). Furthermore, the Code allows the application of special audits on the request of any shareholder. 3. RESEARCH METHODOLOGY AND FINDINGS With the aim of analyzing development in corporate governance practices, corporate governance rating reports of ISE Corporate Governance Index Companies were examined for the years between 2007 and 2012. The study covers seven companies for 2007, 12 companies for 2008, 24 companies for 2009, 31 companies for 2010, 38 companies for 2011 and 44 companies for 2012. The list of ISE corporate governance index companies and their corporate governance ratings for the years between 2007 and 2012 are listed in Appendix I. In appendix I, ratings for each section of corporate governance principles are given along with the overall corporate governance grades. Corporate governance ratings between the years of 2007 and 2012 demonstrate the degree of compliance with CMB’s Corporate Goverance Principles released in 2003 and revised in 2005. Rating Institutions has revised their rating methodology for corporate governance ratings issued on or after December 31,2012. After December 31, 2012 corporate governance ratings are going to be determined on the basis of both Corporate Governance Principles and the Communiqué Serial: IV, No: 56. As a result, this study includes corporate governance ratings merely based on corporate governance principles. Corporate governance ratings are granted out of 10. Rating scale and the explanation of each rating are given in Appendix II. Like Corporate Governance Principles, corporate governance rating reports include 4 main sections namely Shareholders, Public Disclosure and Transparency, Stakeholders and Board of Directors. In compliance with the CMB’s directive, rating institutions use weights for each main section to reach an overall Corporate Governance Rating. The weights are as follows: Shareholders 25%, Disclosure and Transparency 35%, Stakeholders: 15%, Board of Directors 25%. In the remaining part of the paper, each section will be analyzed in detail. For each section, initially corporate governance principles will be summarized, the weaknesses and strengthnesses of 209 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo companies until 2009 will be explained and then the improvements in corporate governance practices after 2009 will be analyzed. 3.1.Shareholders The first section of the CMB Corporate Governance Principles concerns the protection of shareholders’ rights. The Principles list some basic rights of shareholders including; obtaining accurate information, actively participating in the general shareholders’ meeting, voting rights, minority and dividend rights, and equal treatment. Under Principles, “Shareholders Relations Department” should be established to enhance relations between shareholders and the company. Except trade secrets, all information required to exercise shareholder’s rights should be available to all shareholders and there should not be any discrimination among them. Shareholders should have right to request a special auditor to be appointed. Shareholders section of principles covers the process of preparation for the general shareholders’ meeting, its conduct and publication of the results. In this context, in order to assure a high participation, general shareholders’ meeting should be announced at least three weeks in advance. Invitation should include date, time, location and agenda of the meeting along with all necessary informative documents. During the meeting, shareholders should have equal opportunities to declare their opinions especially regarding remuneration policy for board members and executives. Once one owns a share, the right to vote is automatically granted. Privileges regarding voting rights should be avoided and a shareholder may have right to vote by use of a proxy who is a shareholder or not. The cumulative voting procedure should be adopted with the purpose of protecting minority rights. Moreover, company’s dividend policy should be defined clearly in the annual report and it should be announced at the general shareholders’ meeting. Figure 1 shows the ISE Corporate Governance Index companies’ average ratings for shareholder sections between 2007 and 2012. Figure 1 Average Ratings for Shareholders Section Shareholders 10 8 7.9 8.05 8.15 8.22 8.31 8.47 2007 2008 2009 2010 2011 2012 6 4 2 0 3.1.1. Strengthnesses and Weaknesses of Companies Until 2009 After examining shareholders sections of corporate governance rating reports, following strengtnesses and weaknesses were identified.Even though some of the companies do not have Corporate Governance Committee, Shareholders Relations Departments have been established by almost all companies. For the companies which have Corporate Governance 210 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Committee within the board, the activities of the Shareholders Relations Department are performed under the supervision of Corporate Governance Committee. General Shareholders’ Meetings are held in accordance with the articles of associations and related legislation. With regard to facilitating shareholder rights, all necessary information and documentation are available for and easily accessible by the shareholders. In compliance with corporate governance principles, a substantial number of companies do not have provisions to apply ceiling limit to shareholders’ number of votes. Shareholders generally have right to exercise proxy voting and proxy forms are duly disclose for those who are not able to participate in the general shareholders meeting in person. A vast number of companies have a clearly defined dividend policy which is announced to the shareholders at the general shareholders meeting and also included in the company’s annual report. As a result of rating institutions’ review of the articles of associations of the companies, the minutes of the general shareholders meetings, and the interview with company officials, institutions have observed that equal treatment of shareholders are prominently pervasive among Turkish companies. However, there are some prominent areas that need further improvements to protect the rights of minority shareholders. Almost all companies do not have provision that allows shareholders the right to request from the general shareholder meeting the appointment of a special auditor for the examination and clarification of a specific material situation. Likewise, almost all companies do not have cumulative voting procedure. Additionally, some companies have voting privileges for preferred stocks. The strengthnesses and weaknesses of companies regarding shareholder section are summarized below: Table 2 Shareholders Successful Implementation Shareholders relations department General shareholders meeting No ceiling limits applied on the number of votes Shareholders generally have right to exercise proxy voting No provisions to impede the transfer of shares Dividend policies are established and publicly disclosed Equal treatment of shareholders The Issues Should Be Improved Corporate governance committee within the board Voting privileges Deficiencies Right to request appointment of special auditors from the general shareholders meeting Lack of cumulative voting procedures 3.1.2. Improvements and Ongoing Weaknesses after 2009 The most prominent development after 2009 is related to establishment of committees. It is observed that almost all companies has established a corporate governance committee within the board. It is also observed that almost all company’s corporate governance committee chair is an independent member. Voting privilege is still exist for some companies. For example, a company has voting privileges for the nomination of candidates for board membership in the articles of association and another company has some 211 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo privilages for preferred stocks. In conclusion, it is observed that voting privilage is one of the areas that still needs improvements. Even years have passed after the issuance of corporate governance principles, there is no improvement regarding right to request appointment of special auditors and cumulative voting procedures. A vast number of companies do not have provision in the articles of association which allow shareholders to have the right to request appointment of special auditors from the general shareholder meeting. Additionally, it is examined that almost none of the companies apply cumulative voting procedure. 3.2.Public Disclosure and Transparency The principle of public disclosure and transparency is aimed at presentation of timely, accurate, comprehensible, analyzable, highly accessible and available information to shareholders and stakeholders. Under this section, companies should establish information policy and disclose it to the public. Two executives should be assigned to sign official documents related to public disclosures. All information related to company should be disclosed accurate, complete, comprehensible and easily accessible. According to principles, key areas that should be disclosed to public are: any developments that may affect the value of the company’s capital market instruments, the dividend policy of companies, ethical rules of companies, and projected financial statements. Additionally, a company which is listed on foreign securities exchange should simultaneously disclose the information in Turkey that is disclosed abroad. Whenever shareholding or voting right percentage of an individual or group reaches, exceeds or fall below the thresholds of 5%, 10%, 25%, 33%, 50%, and 66,67% of total share capital or voting rights, a company should disclose such information. Moreover, the company’s ultimate controlling individual shareholder or shareholders should be disclosed to the public, as identified after being released from indirect or cross ownership relations between co-owners. The company’s capital structure should be presented in a table format that would include the names of the ultimate controlling individual shareholders’ amount and proportion of their shares. Board members, executives and shareholders who directly or indirectly own 5% of the company’s capital should disclose all transactions performed on the company’s capital market instruments and all information about the purchase and sales of capital market instruments of other group companies or any other company with whom the company maintains a material commercial relationship. Furthermore, commercial and non-commercial transactions between the company and companies, where board members, executives and shareholders, who either directly or indirectly own at least 5% of the company’s capital, possess at least 5% and more of shareholding are disclosed to public. Annual reports should cover all kinds of information regarding company’s activities. Periodical financial statements and footnotes, all forms of incentives that is designed to grant shares to employees, information about the sector in which company operates, board of directors’ and audit firm’s opinion about the internal control system should be disclosed to public in an annual report. Board of directors can appoint an audit firm for a maximum period of 5 years. Only after two accounting periods following the audit firm rotation, the company can appoint the same audit firm. Audit firms and auditors are prohibited to provide consultancy services to the companies to which they provide external audit services within the same period. A consultancy firm, which has a parent audit firm, cannot provide consultancy services to the company that the parent audit firms provides external audit services to within the same period. Lastly, list of names that may possess price sensitive 212 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo information should be disclosed to public. Public Disclosure and Transparency Sections’ average ratings are shown in Figure 2. Figure 2 Average Ratings for Public Disclosure and Transparency Section Public Disclosure and Transparency 10 8.44 8.60 8.79 9.01 9.08 9.16 2007 2008 2009 2010 2011 2012 8 6 4 2 0 3.2.1. Strengthnesses and Weaknesses of Companies until 2009 As a result of examining Public Disclosure and Transparency sections of rating reports, following comments concluded for ISE Corporate Governance Index companies. Companies utilize a website as an effective tool in public disclosure. All companies listed on Corporate Governance Index have an easily accessible websites and it is observed that increasing number of companies is in effort to improve the content of their websites. While Turkish versions of websites are comprehensive enough, English versions are generally in improvement progress in terms of content and disclosure for foreign investors. Another developing area is information policy. It is observed that before 2009, many companies did not have any written information policy, on the other hand according to 2009 rating reports; almost all companies have established a collective set of written principles and an information policy to be used in public disclosure. The information or disclosure policy aim at providing shareholders, stakeholders and the public timely, complete and accurate information in line with the CMB corporate governance principles. The disclosure policy covers scope, forms, frequency and methods of disclosure, informs about the company’s authorized persons regarding public disclosure, and outlines how the company deals with investors. English and Turkish version of comprehensive annual reports are disclosed on website of companies. Periodical financial statements and annual reports are signed by the responsible board members and executives indicating that the current periodical financial statements completely reflect the true financial status of the company. Periodical financial statements and footnotes are prepared in line with CMB legislation and international accounting standards and applied accounting policies are included in the footnotes of the financial statements. On the other hand, forward looking information such as projected financial statements is very rare in annual reports. Overall, annual reports are comprehensive in terms of content and information relevant to investors. Nevertheless, there are still some areas that need further improvement. The Corporate Governance Compliance Reports regarding the implementation of the principles are included in the annual reports. However, most of the companies don’t explain the reasons of lacking implementation in their Corporate Governance Compliance Reports. Most of the 213 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo companies have established ethical rules and they are disclosed in the form of a Code of Ethics. A list of the names of insiders is disclosed in annual reports. However, in order to prevent insider trading, companies should try to enforce necessary measures and establish policy for insider trading that provides some information on the matter like definitions, implementation, responsibilities and penalties for violators. All of the companies that are examined in this study are publicly held companies. By CMB legislation, companies have to notify ISE about every kind of developments which will considerably influence the company. All of the companies comply with CMB and ISE legislations in disclosure process regarding important events and developments. All companies duly disclose any significant changes in the management and capital structure of the company, change in core operations of the company, and any kind of information that would affect the profitability of company in the “disclosure of special events” published by the Istanbul Stock Exchange (ISE). Major deficiencies regarding this section are the facts that; most of the companies’ ultimate controlling individual shareholders are not disclosed to public and remuneration of executives generally do not exist in annual reports. Moreover, most of the companies’ capital structure is not presented in a table format that would include the names of the ultimate controlling individual shareholders names, amount and proportion of their share. Under principles, in case shareholding or voting right percentage of an individual reaches, exceeds or falls below the thresholds of total share capital or voting rights, companies should disclose information to public. However, according to investigation of rating institutions, almost all companies’ officials have declared that there is no transaction in this respect. As a result of rating institutions’ examining the auditor contract and having interview with corporate officials and responsible independent auditor, they have reached a conclusion on auditors’ independence. The independent auditors’ reports confirm that the financial statements present fairly the financial position and annual performance of the company in accordance with the financial reporting standards issued by the CMB. Table 3 Public Disclosure and Transparency Successful Implementation Comprehensive and easily accessible websites Written information policy Comprehensive annual reports Periodical financial statements comply with rules and regulations Insider lists are published Disclosure about developments that may affect the value of the company Code of ethics The Issues Should Be Improved English version of websites Deficiencies Corporate Governance Compliance Report does not include reasons of lacking implementation Forward looking information in annual reports Remuneration of executives are not disclosed to public List of ultimate controlling individual shareholders Measures and precautions to prevent insider trading. 214 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 3.2.2. Improvements and Ongoing Weaknesses after 2009 There is a considerable improvement in establishing an English version of web sites. Almost all companies has established an English version of websites that contain all relevant information in English. Moreover, some companies have restructured corporate web site to provide richer content for investors. Whereas there is an improvement in respect to declaration of reasons for non application of some of the Corporate Governance Principles, there are still some companies that insist on not to disclose the reasons of noncompliance. A visible improvement can be observed in presentation of ultimate controlling individuals. Majority of the companies has begun to disclose ultimate controlling individual shareholders. However such area still needs improvement because the list of ultimate controlling individual shareholders are still not included in some companies’ annual reports. Similarly, in comparison to 2009 there is an improvement in disclosing remuneration of executives, however this is another area that needs more improvement. Some companies’ annual reports involve the management’s evaluation of forward looking information that includes estimates, expectations and strategic priorities of the company. Nonetheless, most of the companies still do not disclose future forecasts of financial information. All of the companies disclose the list of insider traders however by 2012 very few of them has taken measures to prevent insiders. 3.3.Stakeholders This section of CMB Corporate Governance Principles covers the company’s basic policies towards stakeholders. Under this section, the corporate governance framework of the company should recognize the rights of stakeholders established by laws or through any other mutual agreement. In case of the rights of the stakeholders are not regulated by a legislation, the company should preserve the interest of stakeholders. Stakeholders should be informed about company’s policies and procedures, which aim to protect stakeholders’ rights. Company should overcome any conflicts between the company and its stakeholders. Stakeholders should be able to freely communicate their concerns about any illegal or unethical practices to the board. The company should establish mechanisms to encourage participation of the stakeholders in the management of the company. Board of directors and executives should not take actions that would cause the company assets lose value. The company should adopt written employment policies that would provide equal opportunities to individuals who have similar specifications. The company should conduct regular informative meetings with employees and employees should be informed any significant development or decision taken by the company that clearly affects them. The opinions of the trade union regarding the rights of the employees should be taken into account. The company should adhere to quality standards in production. Ethical rules should be established, submitted to the general shareholders’ meeting and disclosed to the public. The company should encourage social responsibility projects that cover subjects such as education, health and environment. Average ratings for stakeholders section for the years 2007, 2008 and 2009 are shown in Figure 4. 215 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Figure 3 Average Ratings for Stakeholders Section Stakeholders 10 8.04 8.64 8.88 8.85 9.01 9.06 2008 2009 2010 2011 2012 8 6 4 2 0 2007 3.3.1. Strengthnesses and Weaknesses of Companies until 2009 As a result of overviewing Stakeholders sections of rating reports, comments are summarized as follows. With regard to relations between companies and stakeholders, none of the companies have experienced infringements regarding the stakeholders’ rights that are protected by legislation and contracts. Protection of stakeholders’ rights is facilitated by all companies. However, majority of the companies do not have any provisions in the articles of associations for the company promoting the participation of stakeholders in the management of the company. Thus, stakeholders do not take part in management. Stakeholders are informed of the company policies and procedures most commonly via web sites. For many companies, the communication between the company and the suppliers is kept through annual communication meetings. Companies also take into consideration customer satisfaction and Customer Communications Centers are responsible for dealing with customers’ problems. Most of the companies have strict quality standards for production systems. TS_EN ISO 9001 certificates prove that quality management systems have been implementing within companies. In production processes, companies are sensitive to use less polluting materials, reduce waste and recycle. They also generally make considerable contribution to the other areas of social responsibility such as education and social health. Companies provide information on their social responsibility activities within their annual reports as well as on their web sites. While almost all companies have written code of ethics that was approved by board, some of them still have not submitted to general shareholders’ meeting. Companies have written Human Resources’ Policy which regulates staff training, performance evaluation and other relevant subjects. Companies provide equal opportunities and treatment to individuals who have similar specifications. On the other side, employees’ participation to management is an area that should be improved for many companies. Trade unions take active part in many companies. 216 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Table 4 Stakeholders Successful Implementation No infringements regarding the stakeholders’ rights Effective human resources policy Wide range of social responsibility projects Comprehensive codes of ethics Quality standards in company products and services Relations with customers and suppliers The Issues Should Be Improved Employees participation to management Deficiencies No provision in the articles of associations regarding the participation of stakeholders in the management 3.3.2. Improvements and Ongoing Weaknesses after 2009 During the examination of stakeholders sections of corporate governance reports, it is observed that employees and stakeholders participation to management still needs a significant improvement. Most of the companies do not have provision in the articles of association regarding the participation of stakeholders in the management of the company. However some of the companies declared that there are certain implementations or some actions in place. The reason of the increase in the average rating of stakeholders section is mainly because of the improvements in other areas such as social responsibility projects, codes of ethics or relations with customers and suppliers. 3.4.Board of Directors Under the fourth section of CMB Principles, the mission and vision of the company should be established and disclosed to public. With respect to the company’s mission and vision, the board of the directors acts as the main responsible body for the company’s goals. The board of the directors’ responsibilities and duties should be defined in the articles of association and annual reports of the companies. Board members should be qualified and proficient about the management of the company. They should be eligible in terms of background and work history. Board of the directors comprises of both executive and non-executive members. Board chairman and chief executive officer should not be the same person and majority of the board of directors should consist of non-executive members. The board also should comprise independent members. At least one third of the board of directors and in any case two members of the board should be independent. A person who has been a member of the company’s board of directors for seven years cannot be appointed as an independent member to the board of directors. With respect to election of the board of directors, cumulative voting procedure should be adopted. Compensation of board members should be determined at general shareholders’ meeting. Incentive remunerations of board of directors should be based on performance of both board members and company. Audit committee and corporate governance committee along with other necessary committees should be formed. Chairman for each committee should be elected among independent members of board. Each committee should comprise of at least two members and if there 217 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo are two members, both of them should be non-executive members. If there are more than two members, the majority of committee members should be non-executive members. Additionally, board members cannot be assigned to more than two committees. An audit committee oversees the financial and operational activities of the company and should convene at least once in three months. Corporate governance committee should be in charge of monitoring corporate governance practices compliance with Principles. The majority of the corporate governance committee should comprise of independent members and the chief executive officer/general director should not be a member of this committee. Board members should devote sufficient time for company’s business and they should be jointly liable for the damage caused by their insufficient performance on their duties assigned to them by legislation, the articles of association and the general shareholders’ meeting. Board members are responsible for preparing financial statements and establishing internal control and risk management mechanisms within the company. The chief executive officer/general manager, the managing director or the head of the relevant department responsible for the preparation of financial statements should sign a written official declaration that covers items such as; carefully examination of financial statements and annual reports, no misleading statements or lack of information in financial statements and reflecting the truth about the company’s financial situation and operations in financial statements. Some of the other duties of board of directors are; approving annual budgets, business plans of company and remuneration of executives, determining ethical rules, information policies, policies of shareholders and stakeholders and controlling the company’s expenditures that exceed 10% of total assets. In case of opposition of an independent board member in a particular issue at the board meeting, dissenting vote should be disclosed to public. Board of director section’s average ratings for Corporate Governance Index Companies is graphed below. Figure 4 Average Ratings for Board of Director Section Board of Director 10.00 8.00 7.00 7.07 6.92 7.13 7.27 2007 2008 2009 2010 2011 8.15 6.00 4.00 2.00 0.00 2012 3.4.1. Strengthnesses and Weaknesses of Companies until 2009 Boards of directors have the highest level power to take decisions, to designate strategies and to represent the company. Within this framework, the mission, vision and strategic targets of ISE Corporate Governance Index companies have been established by boards of directors and are disclosed to public. Overall, the boards of directors fulfill their duties with due diligence and meets their responsibilities. Board meetings are conducted in an efficient and sound manner. In case of dissenting votes the dissenting board members are 218 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo urged to indicate the reasons in the minutes. Executives are to attend meetings whenever necessary and requested. However, some companies’ board of the directors still does not have sufficient independent members. Nonetheless, companies that have independent member in board generally do not comply with the one-third proportion of independent directors recommended by the CMB principles. Duties of board members are clearly described in articles of association and annual reports. Boards are staffed by highly qualified and managerially skillful members. However, before commencing work, board members’ written declarations that they will comply with the legislation, articles of associations and in house regulations are not practicing in companies. Furthermore, there is also no declaration regarding the fact that in case of incompliance members of board would be jointly liable to compensate the losses. Within Corporate Governance Index companies generally two committees have been set up to support the work of the board; Audit Committee and Corporate Governance Committee. Almost all companies have audit committee that oversees all internal and external audit activities. However, there is still considerable number of companies need to form Corporate Governance Committee. Additionally, since independent member of board is a prominent deficiency of companies, chairmen of committees are another subject that needs to be improved. The work of existing committees is closely related to the board. Committee meeting minutes and special reports are reported to the boards. The remuneration policy could be further improved in order to comply with the CMB principles. Compensation is determined by general shareholders meeting and it is solely composed of a fixed salary. Generally, there are no additional attendance or committee membership fees. Table 5 Board of Directors Successful Implementation Vision, mission and strategic goals are clearly defined The board is staffed with effective and highly qualified members Executives are qualified and experienced The Issues Should Be Improved Separate the Board Chairman and the General Manager/CEO positions Corporate Governance Committee Independent member in the Board of Directors Deficiencies The cumulative voting system is not applied No written declaration regarding executives’ joint liability for company’s losses caused by a violation of their duties The stakeholders do not have the right to call for a meeting of Board of Directors No performance based incentive remunerations 3.4.2. Improvements and Ongoing Weaknesses after 2009 After 2009 tremendous improvement was observed regarding increasing number of independent board members and establishment of new committees. During the examination of corporate governance rating reports it is observed that almost all companies have established corporate governance committees. Further, almost all corporate governance committees has chaired by independent members. Almost all companies has an audit committee that is formed entirely by indepent board members. Generally, all 219 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo members of the audit committee and the majority of the members of the corporate governance committee are non-executive board members. Along with corporate governance and audit committee majority of companies have established risk management committee. While there is a considerable increase in the compliance degree of committee and independent member requirements, there is slight improvement concerning other weaknesses. It is generally observed that cumulative voting system still is not being applied by companies. Moreover, generally companies do not have written declaration regarding executives’ joint liability for company’s losses caused by a violation of their duties. Additionally, for majority of companies stakeholders do not have right to call for a meeting of Board of Directors. Also, it is observed that only some of the companies utilize performance based incentive remunerations. To sum up, such areas still need improvements for the companies listed in ISE Corporate Governance Index. CONCLUDING REMARKS Istanbul Stock Exchange (ISE) Corporate Governance Index has been active since August 31, 2007. Year by year, number of companies in this index has been increasing drastically. A review of corporate governance rating reports demonstrates that the average of overall corporate governance ratings is well above 7 which is the threshold for ISE Corporate Governance Index. It is observed that overall corporate governance ratings have been gradually increasing year by year. In order to summarize the improvement of corporate governance practices in Turkey, average overall grades for the years between 2007 and 2012 are shown in Figure 5. ISE Corporate Governance Index Companies’ Average Overall Ratings Figure 5 Overall Ratings 10 8 7.89 8.11 8.18 8.32 8.44 8.73 2007 2008 2009 2010 2011 2012 6 4 2 0 Further examination of each section reveals the weaknesses and strengthnesses of companies. According to this examination it is observed that while shareholders, public disclosure and transparency and stakeholders sections’ grades have increased gradually, there were slight improvement in board of directors’ section until 2011. The sharp increase in the average ratings of board of directors section might be due to the enforcement of Communiqué Serial : IV, No:56. Because, under this Communiqué all members of audit committee and the chairmen of other committee’s must be selected from independent board members. Figure 6 Ratings for the Years Between 2007 and 2012 220 �8.47 9.16 9.06 8.15 8.31 9.08 9.01 7.27 8.22 9.01 8.85 7.13 8.15 8.79 8.88 6.92 8.05 8.60 8.64 7.07 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 7.90 8.44 8.04 7.00 International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Shareholders Public Disclosure and Transperancy Stakeholders Board of Directors 2007 2008 2009 2010 2011 2012 Figure 6 depicts the developments in each section from 2007 to 2012. In summary, board of directors is the weakest part with the average 7,00, 7.07, 6.92, 7.13, 7.27, and 8,15 in years 2007, 2008, 2009,2010, 2011, and 2012 respectively. This study includes the analysis of corporate governance practices of Istanbul Stock Exchange Corporate Governance Index Companies. In the future, this study can be expanded by analyzing Istanbul Stock Exchange National 100 Index Companies. Since most of the ISE National 100 Index Companies do not publish corporate governance rating reports, or authors may conduct analysis through developing a corporate governance scorecard. APPENDIX I: Corporate Governance Ratings 221 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company DOGAN YAYIN HOLDING A.S. HURRIYET GAZETECILIK VE MATBAACILIK A.S. TOFAS TURK OTOMOBIL FABRIKASI A.S. TURK TRAKTOR VE ZIRAAT MAKINELERI A.S. TURKIYE PETROL RAFINERILERI A.S. VESTEL ELEKTRONIK SANAYI VE TICARET A.S. Y VE Y GAYRIMENKUL YATIRIM ORTAKLIGI A.S. ANADOLU EFES BIRACILIK VE MALT SANAYII A.S. ASYA KATILIM BANKASI A.S. DENTAS AMBALAJ VE KAGIT SANAYI A.S. OTOKAR OTOMOTIV VE SAVUNMA SANAYI A.S. YAPI VE KREDI BANKASI A.S. ARCELIK ANONIM SIRKETI COCA-COLA ICECEK A.S. DOGAN SIRKETLER GRUBU HOLDING A.S. IS FINANSAL KIRALAMA A.S. LOGO YAZILIM SANAYI VE TICARET A.S.. PETKIM PETROKIMYA HOLDING. A.S. TURK PRYSMIAN KABLO VE SISTEMLERI A.S. SEKERBANK TURK ANONIM SIRKETI TAV HAVALIMANLARI HOLDING A.S. TURKIYE SINAI KALKINMA BANKASI A.S. TURK TELEKOMUNIKASYON A.S. VAKIF MENKUL KIYMETLER YATIRIM ORT. A.S. TURCAS PETROL A.S. PARK ELEKTRIK URETIM MAD. SAN. VE TIC. A.S. AYGAZ A.S. ALBARAKA TURK KATILIM BANKASI A.S. YAZICILAR HOLDING A.S. IHLAS HOLDING A.S. IHLAS EV ALETLERI IMALAT SAN. VE TIC. A.S. DOGUS OTOMOTIV SERVIS VE TIC. A.S. MENSA SINAI TICARI VE MALI YATIRIMLAR A.S. PINAR SUT MAMULLERI SAN. A.Ş. EGELI & CO YATIRIM HOLDING A.S. TURKIYE HALK BANKASI A.S. IS YATIRIM MENKUL DEGERLER A.S. GLOBAL YATIRIM HOLDING A.S. GARANTI FACTORING HIZMETLERI A.S. ENKA INSAAT VE SAN. A.S. PINAR ENTEGRE ET VE UN SANAYII A.S. BOYNER BUYUK MAGAZACILIK A.S. ASELSAN ELEKTRONIK SANAYI VE TIC. A.S. IS GAYRIMENKUL YATIRIM ORTAKLIGI A.S. AVERAGE 222 Overall Corporate Governance Ratings 2007 2008 2009 2010 2011 2012 8,59 8,76 8,76 8,78 8,88 9,01 7,97 8,32 8,43 8,47 8,55 9,01 7,74 8,16 8,24 8,42 8,58 9,03 7,52 7,83 8,12 8,30 8,50 8,90 7,91 8,34 8,34 8,56 8,62 9,10 7,59 8,26 8,34 8,40 8,59 8,83 7,88 8,16 8,16 8,27 8,56 8,66 8,10 8,27 8,40 8,55 8,94 7,56 7,82 8,17 8,26 8,61 7,82 7,82 8,03 8,06 8,69 7,94 8,12 8,32 8,47 8,68 8,02 8,44 8,79 8,80 8,81 8,21 8,55 8,59 9,11 8,30 8,43 8,50 8,88 8,26 8,42 8,59 9,03 8,02 8,38 8,58 9,03 8,05 8,17 8,26 8,60 7,71 8,19 8,52 8,72 7,76 8,08 8,15 8,44 8,14 8,66 8,76 8,82 8,33 9,04 9,10 9,20 8,77 8,92 9,10 9,11 8,01 8,27 8,87 8,80 7,81 8,23 8,41 8,73 7,52 8,12 8,40 8,65 8,67 8,82 8,46 8,50 8,96 8,14 8,28 8,22 8,04 8,30 8,78 7,71 7,91 8,09 7,12 7,39 7,68 7,71 8,63 7,59 7,75 8,34 8,87 8,20 8,60 8,74 8,77 8,63 8,87 8,36 8,80 8,36 9,16 8,77 8,64 8,77 8,53 7,89 8,11 8,18 8,32 8,44 8,73 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 Company DOGAN YAYIN HOLDING A.S. HURRIYET GAZETECILIK VE MATBAACILIK A.S. TOFAS TURK OTOMOBIL FABRIKASI A.S. TURK TRAKTOR VE ZIRAAT MAKINELERI A.S. TURKIYE PETROL RAFINERILERI A.S. VESTEL ELEKTRONIK SANAYI VE TICARET A.S. Y VE Y GAYRIMENKUL YATIRIM ORTAKLIGI A.S. ANADOLU EFES BIRACILIK VE MALT SANAYII A.S. ASYA KATILIM BANKASI A.S. DENTAS AMBALAJ VE KAGIT SANAYI A.S. OTOKAR OTOMOTIV VE SAVUNMA SANAYI A.S. YAPI VE KREDI BANKASI A.S. ARCELIK ANONIM SIRKETI COCA-COLA ICECEK A.S. DOGAN SIRKETLER GRUBU HOLDING A.S. IS FINANSAL KIRALAMA A.S. LOGO YAZILIM SANAYI VE TICARET A.S.. PETKIM PETROKIMYA HOLDING. A.S. TURK PRYSMIAN KABLO VE SISTEMLERI A.S. SEKERBANK TURK ANONIM SIRKETI TAV HAVALIMANLARI HOLDING A.S. TURKIYE SINAI KALKINMA BANKASI A.S. TURK TELEKOMUNIKASYON A.S. VAKIF MENKUL KIYMETLER YATIRIM ORT. A.S. TURCAS PETROL A.S. PARK ELEKTRIK URETIM MAD. SAN. VE TIC. A.S. AYGAZ A.S. ALBARAKA TURK KATILIM BANKASI A.S. YAZICILAR HOLDING A.S. IHLAS HOLDING A.S. IHLAS EV ALETLERI IMALAT SAN. VE TIC. A.S. DOGUS OTOMOTIV SERVIS VE TIC. A.S. MENSA SINAI TICARI VE MALI YATIRIMLAR A.S. PINAR SUT MAMULLERI SAN. A.Ş. EGELI & CO YATIRIM HOLDING A.S. TURKIYE HALK BANKASI A.S. IS YATIRIM MENKUL DEGERLER A.S. GLOBAL YATIRIM HOLDING A.S. GARANTI FACTORING HIZMETLERI A.S. ENKA INSAAT VE SAN. A.S. PINAR ENTEGRE ET VE UN SANAYII A.S. BOYNER BUYUK MAGAZACILIK A.S. ASELSAN ELEKTRONIK SANAYI VE TIC. A.S. IS GAYRIMENKUL YATIRIM ORTAKLIGI A.S. AVERAGE 223 2007 8,53 7,89 7,52 7,57 7,73 8,01 8,03 2008 8,88 8,32 7,76 7,76 8,31 8,43 8,27 8,61 7,02 6,16 8,74 8,29 7,90 8,05 Shareholders 2009 2010 8,88 8,88 8,32 8,51 7,73 8,00 7,98 8,00 8,30 8,48 8,47 8,51 8,53 8,67 8,70 8,80 7,24 7,29 8,16 8,40 8,81 8,77 8,56 8,72 8,55 8,87 7,95 8,00 8,55 8,55 8,20 8,22 7,99 8,16 7,21 8,00 8,67 8,88 7,40 8,51 8,10 9,05 8,55 8,77 7,69 7,94 7,03 7,86 7,29 8,68 8,81 7,46 7,98 7,11 5,77 8,15 8,22 2011 9,04 8,69 8,05 8,05 8,50 8,51 8,75 8,82 7,35 8,40 8,91 8,71 8,87 8,03 8,71 8,15 8,21 8,40 8,71 8,54 9,06 8,78 8,07 8,20 8,30 8,68 8,91 7,71 7,99 7,89 6,81 6,86 7,87 8,33 7,94 8,62 8,13 8,23 8,31 2012 8,92 9,16 8,11 8,09 8,77 8,84 8,75 8,85 7,36 8,65 8,95 8,72 8,95 8,11 8,71 8,30 8,49 8,61 8,85 8,63 9,10 8,79 8,07 8,40 8,40 8,76 8,96 7,73 8,02 8,01 7,27 8,33 7,97 8,45 8,09 8,75 8,61 8,35 8,19 8,91 8,14 8,77 8,00 8,66 8,47 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company DOGAN YAYIN HOLDING A.S. HURRIYET GAZETECILIK VE MATBAACILIK A.S. TOFAS TURK OTOMOBIL FABRIKASI A.S. TURK TRAKTOR VE ZIRAAT MAKINELERI A.S. TURKIYE PETROL RAFINERILERI A.S. VESTEL ELEKTRONIK SANAYI VE TICARET A.S. Y VE Y GAYRIMENKUL YATIRIM ORTAKLIGI A.S. ANADOLU EFES BIRACILIK VE MALT SANAYII A.S. ASYA KATILIM BANKASI A.S. DENTAS AMBALAJ VE KAGIT SANAYI A.S. OTOKAR OTOMOTIV VE SAVUNMA SANAYI A.S. YAPI VE KREDI BANKASI A.S. ARCELIK ANONIM SIRKETI COCA-COLA ICECEK A.S. DOGAN SIRKETLER GRUBU HOLDING A.S. IS FINANSAL KIRALAMA A.S. LOGO YAZILIM SANAYI VE TICARET A.S.. PETKIM PETROKIMYA HOLDING. A.S. TURK PRYSMIAN KABLO VE SISTEMLERI A.S. SEKERBANK TURK ANONIM SIRKETI TAV HAVALIMANLARI HOLDING A.S. TURKIYE SINAI KALKINMA BANKASI A.S. TURK TELEKOMUNIKASYON A.S. VAKIF MENKUL KIYMETLER YATIRIM ORT. A.S. TURCAS PETROL A.S. PARK ELEKTRIK URETIM MAD. SAN. VE TIC. A.S. AYGAZ A.S. ALBARAKA TURK KATILIM BANKASI A.S. YAZICILAR HOLDING A.S. IHLAS HOLDING A.S. IHLAS EV ALETLERI IMALAT SAN. VE TIC. A.S. DOGUS OTOMOTIV SERVIS VE TIC. A.S. MENSA SINAI TICARI VE MALI YATIRIMLAR A.S. PINAR SUT MAMULLERI SAN. A.Ş. EGELI & CO YATIRIM HOLDING A.S. TURKIYE HALK BANKASI A.S. IS YATIRIM MENKUL DEGERLER A.S. GLOBAL YATIRIM HOLDING A.S. GARANTI FACTORING HIZMETLERI A.S. ENKA INSAAT VE SAN. A.S. PINAR ENTEGRE ET VE UN SANAYII A.S. BOYNER BUYUK MAGAZACILIK A.S. ASELSAN ELEKTRONIK SANAYI VE TIC. A.S. IS GAYRIMENKUL YATIRIM ORTAKLIGI A.S. AVERAGE 224 Public Disclosure and Transparency 2007 2008 2009 2010 2011 2012 9,60 9,68 9,68 9,73 9,82 9,82 8,71 9,11 9,13 9,16 9,19 9,39 8,27 9,05 9,26 9,21 9,22 9,15 7,91 8,56 8,84 9,02 9,09 9,08 8,83 8,98 8,98 9,12 9,22 9,22 7,56 8,16 8,33 8,37 8,53 8,80 8,18 8,74 8,76 8,98 9,48 9,40 8,47 8,70 8,96 9,27 9,36 7,33 7,94 8,72 8,91 9,61 8,72 8,71 8,93 8,94 9,04 8,27 8,48 8,95 8,95 8,95 8,11 8,83 9,17 9,25 9,26 8,71 9,22 9,30 9,34 9,21 9,35 9,53 9,54 9,21 9,47 9,41 9,41 8,51 9,23 9,50 9,54 8,54 8,62 8,70 8,81 8,81 9,04 9,36 9,33 7,87 8,61 8,73 8,59 8,70 8,90 8,94 8,95 8,69 9,26 9,34 9,63 9,31 9,36 9,79 9,79 8,98 9,22 9,31 9,33 8,86 8,78 8,83 9,04 8,78 8,83 9,04 9,44 9,47 9,48 9,05 9,07 9,13 9,04 9,04 9,01 8,79 9,30 9,31 8,59 8,75 8,80 8,11 8,04 8,05 8,82 8,83 8,28 8,51 9,06 9,05 8,31 8,85 9,54 9,53 9,12 9,28 8,81 9,31 8,67 9,60 9,00 9,19 9,35 8,89 8,44 8,60 8,79 9,01 9,08 9,16 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company DOGAN YAYIN HOLDING A.S. HURRIYET GAZETECILIK VE MATBAACILIK A.S. TOFAS TURK OTOMOBIL FABRIKASI A.S. TURK TRAKTOR VE ZIRAAT MAKINELERI A.S. TURKIYE PETROL RAFINERILERI A.S. VESTEL ELEKTRONIK SANAYI VE TICARET A.S. Y VE Y GAYRIMENKUL YATIRIM ORTAKLIGI A.S. ANADOLU EFES BIRACILIK VE MALT SANAYII A.S. ASYA KATILIM BANKASI A.S. DENTAS AMBALAJ VE KAGIT SANAYI A.S. OTOKAR OTOMOTIV VE SAVUNMA SANAYI A.S. YAPI VE KREDI BANKASI A.S. ARCELIK ANONIM SIRKETI COCA-COLA ICECEK A.S. DOGAN SIRKETLER GRUBU HOLDING A.S. IS FINANSAL KIRALAMA A.S. LOGO YAZILIM SANAYI VE TICARET A.S.. PETKIM PETROKIMYA HOLDING. A.S. TURK PRYSMIAN KABLO VE SISTEMLERI A.S. SEKERBANK TURK ANONIM SIRKETI TAV HAVALIMANLARI HOLDING A.S. TURKIYE SINAI KALKINMA BANKASI A.S. TURK TELEKOMUNIKASYON A.S. VAKIF MENKUL KIYMETLER YATIRIM ORT. A.S. TURCAS PETROL A.S. PARK ELEKTRIK URETIM MAD. SAN. VE TIC. A.S. AYGAZ A.S. ALBARAKA TURK KATILIM BANKASI A.S. YAZICILAR HOLDING A.S. IHLAS HOLDING A.S. IHLAS EV ALETLERI IMALAT SAN. VE TIC. A.S. DOGUS OTOMOTIV SERVIS VE TIC. A.S. MENSA SINAI TICARI VE MALI YATIRIMLAR A.S. PINAR SUT MAMULLERI SAN. A.Ş. EGELI & CO YATIRIM HOLDING A.S. TURKIYE HALK BANKASI A.S. IS YATIRIM MENKUL DEGERLER A.S. GLOBAL YATIRIM HOLDING A.S. GARANTI FACTORING HIZMETLERI A.S. ENKA INSAAT VE SAN. A.S. PINAR ENTEGRE ET VE UN SANAYII A.S. BOYNER BUYUK MAGAZACILIK A.S. ASELSAN ELEKTRONIK SANAYI VE TIC. A.S. IS GAYRIMENKUL YATIRIM ORTAKLIGI A.S. AVERAGE 225 Stakeholders 2007 2008 2009 2010 7,63 7,82 7,82 7,82 7,40 7,63 8,32 8,32 9,24 9,40 9,40 9,52 8,87 9,15 9,40 9,52 8,81 9,60 9,60 9,82 7,49 9,13 9,13 9,40 6,86 7,18 7,18 7,18 8,80 9,13 9,21 9,15 9,15 9,51 7,70 7,69 7,99 8,63 9,17 9,24 9,50 9,50 9,67 9,52 9,52 9,21 9,64 8,90 8,90 8,87 8,87 8,51 8,92 8,83 9,27 8,71 8,81 9,23 9,79 8,88 9,54 9,57 9,57 8,72 9,15 8,74 8,33 7,33 8,99 9,05 8,04 9,17 7,54 6,63 8,04 8,64 8,88 8,85 2011 2012 7,92 7,95 8,32 9,11 9,52 9,68 9,76 9,76 9,72 9,72 9,40 9,04 7,91 8,52 9,39 9,39 9,56 9,73 8,17 8,55 9,76 9,76 9,54 9,54 9,52 9,52 9,64 9,64 8,90 8,90 9,30 9,53 9,21 9,31 9,51 9,23 9,29 9,29 9,79 9,91 9,68 9,45 9,73 9,73 9,33 9,33 8,54 9,02 8,78 9,27 8,99 8,99 9,05 9,05 8,10 8,21 9,64 9,64 6,82 6,90 6,83 7,07 8,67 8,97 8,68 8,68 9,17 9,31 9,05 9,05 9,66 9,66 8,24 8,43 9,16 9,29 8,46 8,94 9,23 8,86 8,94 7,91 9,01 9,06 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 Company DOGAN YAYIN HOLDING A.S. HURRIYET GAZETECILIK VE MATBAACILIK A.S. TOFAS TURK OTOMOBIL FABRIKASI A.S. TURK TRAKTOR VE ZIRAAT MAKINELERI A.S. TURKIYE PETROL RAFINERILERI A.S. VESTEL ELEKTRONIK SANAYI VE TICARET A.S. Y VE Y GAYRIMENKUL YATIRIM ORTAKLIGI A.S. ANADOLU EFES BIRACILIK VE MALT SANAYII A.S. ASYA KATILIM BANKASI A.S. DENTAS AMBALAJ VE KAGIT SANAYI A.S. OTOKAR OTOMOTIV VE SAVUNMA SANAYI A.S. YAPI VE KREDI BANKASI A.S. ARCELIK ANONIM SIRKETI COCA-COLA ICECEK A.S. DOGAN SIRKETLER GRUBU HOLDING A.S. IS FINANSAL KIRALAMA A.S. LOGO YAZILIM SANAYI VE TICARET A.S.. PETKIM PETROKIMYA HOLDING. A.S. TURK PRYSMIAN KABLO VE SISTEMLERI A.S. SEKERBANK TURK ANONIM SIRKETI TAV HAVALIMANLARI HOLDING A.S. TURKIYE SINAI KALKINMA BANKASI A.S. TURK TELEKOMUNIKASYON A.S. VAKIF MENKUL KIYMETLER YATIRIM ORT. A.S. TURCAS PETROL A.S. PARK ELEKTRIK URETIM MAD. SAN. VE TIC. A.S. AYGAZ A.S. ALBARAKA TURK KATILIM BANKASI A.S. YAZICILAR HOLDING A.S. IHLAS HOLDING A.S. IHLAS EV ALETLERI IMALAT SAN. VE TIC. A.S. DOGUS OTOMOTIV SERVIS VE TIC. A.S. MENSA SINAI TICARI VE MALI YATIRIMLAR A.S. PINAR SUT MAMULLERI SAN. A.Ş. EGELI & CO YATIRIM HOLDING A.S. TURKIYE HALK BANKASI A.S. IS YATIRIM MENKUL DEGERLER A.S. GLOBAL YATIRIM HOLDING A.S. GARANTI FACTORING HIZMETLERI A.S. ENKA INSAAT VE SAN. A.S. PINAR ENTEGRE ET VE UN SANAYII A.S. BOYNER BUYUK MAGAZACILIK A.S. ASELSAN ELEKTRONIK SANAYI VE TIC. A.S. IS GAYRIMENKUL YATIRIM ORTAKLIGI A.S. AVERAGE 226 Board of Directors 2007 2008 2009 2010 2011 2012 7,80 7,93 7,93 7,93 7,96 8,59 7,34 7,63 7,63 7,56 7,68 8,59 6,30 6,57 6,62 7,05 7,67 9,38 6,10 6,10 6,51 6,87 7,38 8,95 6,27 7,73 6,73 7,10 7,24 8,89 7,28 7,69 7,74 7,74 8,27 8,74 7,94 7,81 7,53 7,52 7,46 7,61 6,64 6,71 6,72 6,75 8,17 7,45 7,47 7,46 7,47 7,81 6,30 6,30 6,43 6,43 8,34 6,28 6,31 6,42 6,58 7,38 6,74 7,13 7,74 7,82 7,83 6,37 6,73 6,76 8,69 6,85 6,85 6,83 8,27 6,28 6,53 7,13 7,13 6,66 7,03 7,28 8,76 7,16 7,11 7,13 7,98 6,01 6,54 6,86 7,66 6,12 6,09 6,10 7,32 7,42 7,82 8,10 8,18 7,77 8,40 8,44 8,73 7,76 8,05 8,09 8,10 6,56 6,73 6,79 8,47 6,58 7,79 7,97 8,43 6,11 6,54 6,99 7,29 7,34 7,88 6,93 6,94 8,66 7,62 7,95 7,62 6,39 6,42 8,27 7,17 7,42 7,92 7,36 7,40 7,92 6,62 7,44 5,71 5,89 6,86 8,76 7,79 8,51 7,17 7,20 8,68 8,84 7,39 8,26 8,03 8,92 8,82 7,60 8,64 8,26 7,00 7,07 6,92 7,13 7,27 8,15 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo APPENDIX II: Corporate Governance Rating Scale Rating Explanation 9-10 The company performs very good in terms of Capital Markets Board’s corporate governance principles and has qualified to be included in the ISE’s (Istanbul Stock Exchange) Corporate Governance Index. It has identified and actively managed all significant corporate governance risks through comprehensive internal controls and management systems. The company’s performance is considered to represent best practice, and it had almost no deficiencies in any of the areas rated. 7-8 The company performs good in terms of Capital Markets Board’s corporate governance principles. It has, to varying degrees, identified all its material corporate governance risks and is actively managing the majority of them through internal controls and management systems. During the rating process, minor deficiencies were found in one or two of the areas rated. 6 The company performs fair in terms of Capital Markets Board’s corporate governance principles. It has, to varying degrees, identified the majority of its material corporate governance risks and is beginning to actively manage them. Management accountability is considered in accordance with national standards but may be lagging behind international best practice. During the ratings process, minor deficiencies were identified in more than two of the areas rated. 4-5 The company performs weakly as a result of poor corporate governance policies and practices. The company has, to varying degrees, identified its minimum obligations but does not demonstrate an effective, integrated system of controls for managing related risks. Assurance mechanisms are weak. The rating has identified significant deficiencies in a number (but not the majority) of areas rated. <4 The company performs very weakly and its corporate governance policies and practices are overall very poor. The company shows limited awareness of corporate governance risks, and internal controls are almost non-existent. Significant deficiencies are apparent in the majority of areas rated and have led to significant material loss and investor concern. REFERENCES Akbulak Y. (2011). Türk Sermaye Piyasasında Esaslı Bir Devrim: Kurumsal Yönetim İlkeleri, Mali Cozum, 108, s.111-138. 227 �International Conference on Economic and Social Studies (ICESoS’13), 10-11 May, 2013, Sarajevo Akdoğan N. & Akdoğan M. U. (2011). The Comparative Analysis of the Harmony of the Turkish Commercial Code Regulations Related to Corporate Governance Principles with the Corporate Governance Principles Issued by Capital Market Board. Accounting and Auditing Review, 11 (35), 1-31. Akdoğan Y. E. & Boyacıoğlu M. A. (2010). Corporate Governance in Turkey: An Overview. Selçuk Üniversitesi Sosyal Bilimler Enstitüsü Dergisi, Issue:24, 11-30. Ararat, M. & Ugur, M. (2003). Corporate Governance in Turkey: an overview and some policy recommendations. Corporate Governance, 3 (1), 58-75. Ararat, M. & Yurtoglu, B. (2006). Corporate Governance in Turkey: an Introduction to the Special Issue. Corporate Governance, 4 (4), 201-206. Arsoy, A. P. & Crowther D. (2008). Corporate Governance in Turkey: Reform and Convergence. Social Responsibility Journal, 4 (3), 407-421. Capital Markets Board of Turkey. (2003). Corporate Governance Principles, http://www.cmb.gov.tr/displayfile.aspx?action=displayfile&pageid=84&fn=84.pdf&su bmenuheader=-1 Corporate Governance Association of Turkey, http://www.tkyd.org/en/ Ergin E. (2012). Corporate Governance Ratings and Market Based Financial Performance: Evidence from Turkey. International Journal of Economics and Finance,4 (9), 61-68. Gurbuz, A.O., Aybars, A. & Kutlu, O. (2010). Corporate Governance and Financial Performance with a Perspective on Institutional Ownership: Empirical Evidence from Turkey”, JAMAR, 8 (2), 22-37 Istanbul Stock Exchange, http://www.ise.org/ Mandacı, P.E. & Gumus, G.K. (2010). Ownership Concentration, Managerial Ownership and Firm Performance: Evidence from Turkey. South East European Journal, 5 (1), 57-66. Needles, B. E., Turel A., Sengur E. D. & Turel A. (2012). Corporate Governance in Turkey: Issues and Practices of High Performance Companies. Accounting and Management Information Systems, 11 (4) 510-531. Sakarya Ş. (2011). The Rating Scores of the Enterprises in Scope of the ISE Corporate Governance Index and the Analysis of Relations Between the Stock Returns with the Event Study Method. ZKU Journal of Social Sciences, 7 (13).147-162. Sengur, E. D. (2011). Do corporate Governance Index Companies Outperform Others? Evidence from Turkey. International Journal of Business and Social Sciences, 2 (14), 254-260. Toraman, C. & Abdioğlu H. (2008). Weak and Strong Sides of Companies which are at ISE Yüksel, C. (2008). Recent Developments of Corporate Governance in the Global Economy and the New Turkish Commercial Draft Law Reforms. Journal of International Commercial Law and Technology, 3 (2), 101-111. Turkish Industry & Business Association (TUSIAD). 2002. Corporate Governance Code of Best Practices: Composition and Functioning of the Board of Directors, http://www.tusiad.org/bilgi-merkezi/raporlar/kurumsal-yonetim-en-iyi-uygulamakodu--yonetim-kurulunun-yapisi-ve-isleyisi/ Yüksel, C. (2008). Recent Developments of Corporate Governance in the Global Economy and the New Turkish Commercial Draft Law Reforms. Journal of International Commercial Law and Technology, 3 (2), 101-111. 228 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1534 Title A name given to the resource Improvement of Corporate Governance Practices of İstanbul Stock Exchange (ISE) Corporate Governance Index Companies Author Author DILEK SENGUR, Evren Abstract A summary of the resource. A series of corporate scandals highlighted the corporate governance issue all around the world. Like other countries, Turkey has adopted strong regulatory framework for corporate governance in the last decade. The purpose of this study is to analyze the improvement in corporate governance practices of İstanbul Stock Exchange Corporate Governance Index Companies between the years of 2007 and 2012. With this purpose corporate governance rating reports of companies were examined. Based on the examination of corporate governance rating reports; it is observed that overall corporate governance ratings have been gradually increasing year by year. Further analysis demonstrates that while stakeholders section is the most strength side, board of directors is the weakest part of Corporate Governance Index Companies. Nonetheless, in 2012 a sharp increase in the ratings of board of directors section was observed thanks to enactment of new Commercial Code and enforcement of Communiqué Serial : IV, No:56. Keywords: Corporate Governance, Corporate Governance Index, Corporate Governance Rating, İstanbul Stock Exchange, Capital Market Board of Turkey. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 978-9958-834-23-3 https://omeka.ibu.edu.ba/files/original/b91839d3b8d30174b521127fc5f4b0a4.pdf 23facdf2ee03c4d08bdf5a1f382c4cae PDF Text Text 1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo Improving Reading Comprehension Skills in ESL Classes through Newspaper Articles Abdülhamit ÇAKIR Selçuk University, Turkey Faculty of Education abdulhamitcakir@yahoo.com.tr Abstract: Newspapers offer good chances of reading practice for ESL learners of different proficiency levels.Since newspaper articles are authentic in terms of language they use,experiences they report,and culture they reflect they may attract ESL learners‘ attention with their headlines,content areas,and pictures.On the other hand, they are difficult to handle for exactly the same reasons. To start with, we had beter take a close look into the nature of reading comprehension. Traditionally, in the study of second language comprehension, it has been the text (language to be comprehended)to blame for failures to comprehend not the reader or listener.Failures to comprehend a well-formed text passage have been attributed to some unknown language elements like words and gramatical rules.But today it is believed that it is not the text but the previously acquired knowledge that makes the comprehension possible.Immenual Kant claimed as long ago as 1781 that ‘new information,new concepts,new ideas can have meaning only when they can be related to something the individual already knows‘(Rumelhart:1980). One of the obvious reasons why a reader fails to understand a text is that the schema involved is culturally specific and does not exist for the reader.If the implicit culture content knowledge presupposed by a text interacts with the reader‘s own background knowledge of content, that text is easier to read and understand than rhetorically and syntactically equivalent text based on a less familiar and more distant culture (Anderson: 1979). Key Words: Newspaper, reading comprehension skills Introduction Newspapers offer good chances of reading practice for ESL learners of different proficiency levels.Since newspaper articles are authentic in terms of language they use,experiences they report,and culture they reflect they may attract ESL learners‘ attention with their headlines,content areas,and pictures.On the other hand,they are difficult to handle for exactly the same reasons. To start with, we had beter take a close look into the nature of reading comprehension. Traditionally, in the study of second language comprehension, it has been the text(language to be comprehended)to blame for failures to comprehend not the reader or listener.Failures to comprehend a well-formed text passage have been attributed to some unknown language elements like words and gramatical rules.But today it is believed that it is not the text but the previously acquired knowledge that makes the comprehension possible.Immenual Kant claimed as long ago as 1781 that ‘new information,new concepts,new ideas can have meaning only when they can be related to something the individual already knows‘(Rumelhart:1980). This previously acquired world knowledge is often called background knowledge ,and knowledge structures as schemata.Comprehending a text involves and interactive process between the text and the reader‘s background knowledge about that topic.When we read we try to map the information input in the text against our existing schema or schemata concerning that piece of information.If there is a missmatch the reader is forced to revise his/her interpretation to make this new information compatible with the previous information to make the whole text cohere (Carell:1983). The background knowledge involved in reading comprehension is of 2 types: a) Formal schema b) Content schema Formal schema is genre knowledge, background knowledge of the formal, textual organizational structures of various discourse types such as, differences in genre, structure of recepie, tales, arbituaries etc. Content schema 1 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo is the background knowledge of content area of a text such as history of needle making, nuclear centers in Iran, Turkey‘s Cyprus policy etc. (Widdowson: 2007). A succesful reader is usually equipped with both of these knowledge sturctures and thus can constitute and efficient interaction between linguistic knowledge and worl knowledge.One of the obvious reasons why a reader fails to understand a text is taht the schema involved is culturally specific and does not exist for the reader.If the implicit culture content knowledge presupposed by a text interacts with the reader‘s own background knowledge of content, that text is easier to read and understand than rhetorically and syntactically equivalent text based on a less familiar and more distant culture(Anderson:1999). Examples: Would you please have a quick look at these four articles. The Tylenol Tragedy The Tylenol tragedy has touched off a wave of renewed concern this October about pint-size Smurfs, E.T‗s, and Wonder women accepting candy from strangers. As the 31st approaches, city officiasl in dozens of towns across the country have banned trick-or-treating altogether, or restircted it to daylight hours. -Can you put these four articles in order from the easiest to the most difficult? It is clear that Turkish readers lack the neccessary background knowledge to be able to understand the Tylenol Tragedy. What background information do we need to be able to understand this article?Halloween is celebrated on the night of October 31.On that night ghosts and witches walk the earth.Children dressed in costumes may do the spirits‘ ―tricks‖ for them.To protect their homes,neighbors must give the chilren ―treats‖ of cookies or candy. From these examples we can draw this conclusion:Some background knowledge about British and American Culture in general and their newspapers and magazines in particular will be of great help to understand and appriciate what we read.First off all, our students should know that there are two types of newspapers, i.e., quality and tabloid.Quality newspapers are also known as broadsheets or heavies and they are considered to be informative and objective.They present the reader with serious news with details and comment on political and economic issues and social and world events.Tabloids, on the other hand, are considered to be more entertaining than informative and they contain many photographs,attention grabbing headlines, sensational stories and scandals(Sanderson:1999). Here is a list of British and American newspapers British newspapers The Daily Telegraph, Financial Times, The Guardian and newspapers,appealing mainly to the upper and middle classes. The Times are known as the quality The Daily Telegraph is right-of-centre in its views and contains reports on national and international news. Financial Times contains a comprehensive coverage of industry, commerce and public affairs and is read mainly by proffecional and bussiness people. The Guardian is the only ‗quality‘ newspaper with liberal/left -of-centre politics.As well as a wide coverage of news events, it also reports on social issues, the arts education etc. The times takes a middle-of-the-road-view, claiming to represent the views of the establishment and is especially well-known for its correspondence column. Daily Express, Daily Mail, Daily Mirror, Daily Star and The Sun are popular,tabloid newspapers-they are smaller in size and contain more photographs and appeal mainly to the working and middle classes. Daily Mail and Daily Express take a right-of-centre viewpoint on most issues. Daily Mirror usually supports the Labour party. 2 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo The Sun and Daily Star are well-known for their pin-ups.The Sun has a larger circulation than any other daily newspaper. The Observer is a serious national Sunday newspaper and is read mainly by the professional middle classes. American Newspapers The Newyork Times is a serious daily newspaper read on a national scale covering national and international news. The Wall Street Journal is a business/investment daily newspaper but it also carries news of national importance. The Washington Post is a serious daily newspaper with full coverage of Congress. International Herald Tribune is a daily newspaper produced in Paris and sold in most countries of the world.It covers American and international news and contains advertisements and reviews. Magazines Newsweek is a weekly American news magazine which covers American and international news and a wide range of topics.There is also an international addition. Punch is a weekly British satirical magazine which is well-known for its cartoons. Time is sold all over the world and contains articles on US and world news as well as general articles on culture, medicene etc. Newspapers especially tabloids use some tabloidese/journalese e.i. some short sensational and often exaggerated and ambiguous words in their headlines.Here is a list of words of this kind. A) The Vocabulary of Tabloids Headline word ACCORD AID AXE BACK BAN BAR BID BLAST BLASE BLOW BOOST CLASH COUP CURB CUT DEAL DRIVE ENVOY EXIT GEMS GO-AHEAD GUNMAN Meaning agreement help cut, destroy, take away support prohibition exclude, prohibit attempt explosion fire injury help, incentive dispute revolution restraint, limit reduction aggreement campaign, effort diplomat leave jewels approval man with gun 3 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo HALT HAUL HEAD HELD HIT JET JOBLESS KEY LINK MAN NET ORDEAL OUST OUTPUT PACT PAY PIT PLEA PLEDGE PLUNGE POLL PRESS FOR PROBE QUIT RAID RIDDLE ROW SCARE SPLIT SQUEEZE STORM STRIFE SWITCH SWOOP TALK TOP VOW WALKOUT WED stop large quantity first stolen and later discovered lead, direct retained, kept in custody affect badly aeroplane unemployed essential, vital connection representative total painful experience, drama push out, drive out, replace production agreement, treaty wages, salary coal mine request for help promise step fall election, public opinion survey demand, ask for investigate leave, resign attack, robbery mystery argument, dispute public alarm divide shortage, scarcity angry reaction, dispute conflict change, deviation sudden attact or raid discussion exceed promise strike marry Newspaper headlines also use different grammaticl structures. B) The structure of headlines 1-Articles and verb ‗to be‘ are frequently omitted, e.g. PET PLAN APPROVED, MAN HELD. 2-Simple Present Tense is used for present and past events,e.g.WOMEN DRIVE BETTER THAN MEN CLAIMS REPORT; DYNAMITE KILLS 52(meaning killed),US VISIT TESTS THE POPE AS POTENTIAL WORLD LEADER. 3-Present Continuous Tense is used to describe something that is developing, e.g. RAIL CHAOS GETTING WORSE. 4-The infinitive is used to refer to future, e.g. POPE TO VISIT US. 5-In passive sentences the auxiliary is omitted and past participle is used,e.g. HIJACKER ARRESTED. 6-A series of nouns are blocked together and used as adjectives, e.g. SOCCER BOY RAIL VICTIM. 4 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo How to Use them in the Classroom. Teachers can use headlines and articles in several different ways: abcde- matching the articles and headlines Finding the synonyms of some headline words in the article. Making appropriate headlines for articles. Putting sentences into headline forms. Finding out different meanings in the ambiguous headlines, etc. A- Explain two different meanings of the following ambiguous headlines. 1-Kids make nutritious snacks 2-Squad helps dog bite victim 3- Miners refuse to work after death 4- Hospitals are used by 7 foot doctors 5- Panda mating fails; veterinarian takes over 6- Lung cancer in women mushrooms 7- Eye drops off shelf 8- Teacher strikes idle kids 9- Juvenile court to try shooting defendant 10- Stolen painting found by tree 11- Drunken drivers paid $1000 12- Local high school dropouts cut in half. 13- Include your chilren when baking cookies. B- Find the word(s) in the article which have the same meaning as the underlined word in the headline. C- Match the following headlines and articles. 1-Actress weds 2-Mother‘s plea for son fails 3-Job row may hit chilren‘s hospital 4- Bush ban on pupils after attack on crew 5- £1 million heroin haul 6- Crime profit tops £166m 7-Young wife‘s bid to beat fear 5 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo Newspaper articles As for articles, newswpapers make use of various articles in different genres such as News in Brief,Home News,Business News,Technology and Science,Comment, Editorials,Letters to the Editor, Motoring News, Televisition, The Arts, Sport, Advertisements,Features, Travel Plitics, Movies, Theatre, Arbituaries, Health, Books, Education, Home-Garden, Real Estate, Fashion-Style, Automobiles Magazine, etc. Teachers may bring these genres in to the clssroom for the students to develop various reading strategies, for different genres require different strategies. For small adds, for instance, students can be asked to match the headlines and the adds or to answer some skimming and scanning questions. For comments and editorials they may be asked to make inferences or to discuss the writer‘s view, etc.( Sharma: 2007, Bakhshandah: 2009). Now, let‘s do a sample reading lesson using a newspaper article. Could you please take a look at the article in yor hands? A12345- Which newspaper is it taken from? What kind of article is it? What is its genre? How are editorals differrent from other types of articles? Are all priests men? Do you know any women priests? In Turkey, do we have any women imams? B- 6- What is the passage about? Look very quickly through the article. Do not worry about the detail or vocabulary you don‘t know.You only need to get a very general idea of the contents C- Now read these questions and find the answers 7- According to the editorial why did some women demand for priesthood? What was the real incentive? 8- How would ordination of women put off Christian re-unification? D- A follow up activity 9- Could this article be published in a left-of-center nespaper? In Turkey? If so would meaning change? --- Questions in (A) are pre-reading questions and aim to activate students‘background knowledge about this topic and thus help them make predictions about the content of the text. --- By the question in (B) it is intended to develop readers‘ skimming skills by finding the gist of the article. --- Questions in (D) aim to make the students comment on the topic and may be used as a follow-up activity. --- Furthermore questions in (B) and (C) have been used to spesify a purpose for reading. 6 �1st International Conference on Foreign Language Teaching and Applied Linguistics May 5-7 2011 Sarajevo References: Anderson, N. (1999). Exploring Second Language Learning:Issues and Strategies. Boston: Heinle&Heinle. Bakhshandch, E. and et all. (2009). Listening, Vocabulary and Translation Skills through News and Media. Tahran: Rahmana Press. Carrell, P. L. (1983a). Background Knowledge in Second Language Comprehension. Language Learning and Communication 2. Carrell, P. L. (1983b). Some issues in studying the role of schemata, or background knowledge, in second language comprehension. Paper presented at the 17th Annual TESOL Convention, Toronto Canada, March, 1983. Grabe, W. and F. Stoller. (2002). Teaching and Researching Reading. New York: Longman Rumelhart, David E. (1980). Schemata: The building blocks of cognition in theoretical issues in reading comprehension, Rand J. Spiro, Bertram C. Bruce, and William E. Brewer (Eds.) Hillsdale, New Jersey: Lawrance Erlbaum Associates. Sanderson, P. (1999). Using Newspapers in the Classroom. Cambridge University Press. Sharma, P. (2007). Reading the news.Thomson ELT. Swales, B and John M. (2007). Genre Analysis English in Academic and Research Setting. Cambridge University Press. Widdowson, H.G. (2007). Discourse Analysis. New York: Oxford University Press. 7 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 541 Title A name given to the resource Improving Reading Comprehension Skills in ESL Classes through Newspaper Articles Author Author ÇAKIR, Abdülhamit Abstract A summary of the resource. Newspapers offer good chances of reading practice for ESL learners of different proficiency levels.Since newspaper articles are authentic in terms of language they use,experiences they report,and culture they reflect they may attract ESL learners‘ attention with their headlines,content areas,and pictures.On the other hand, they are difficult to handle for exactly the same reasons. To start with, we had beter take a close look into the nature of reading comprehension. Traditionally, in the study of second language comprehension, it has been the text (language to be comprehended)to blame for failures to comprehend not the reader or listener.Failures to comprehend a well-formed text passage have been attributed to some unknown language elements like words and gramatical rules.But today it is believed that it is not the text but the previously acquired knowledge that makes the comprehension possible.Immenual Kant claimed as long ago as 1781 that ‘new information,new concepts,new ideas can have meaning only when they can be related to something the individual already knows‘(Rumelhart:1980). One of the obvious reasons why a reader fails to understand a text is that the schema involved is culturally specific and does not exist for the reader.If the implicit culture content knowledge presupposed by a text interacts with the reader‘s own background knowledge of content, that text is easier to read and understand than rhetorically and syntactically equivalent text based on a less familiar and more distant culture (Anderson: 1979). Date A point or period of time associated with an event in the lifecycle of the resource 2011-05 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics https://omeka.ibu.edu.ba/files/original/15afb72cc9a8ca748c3d5c6e01f8ea5e.pdf c2ab8ecf92ada928ff4038d0ae3a8da3 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo Improving the Productivity of Industry-University Collaboration: The Example of Gaziantep University Buket Gültekin İnce Kilis 7 Aralık University, Kilis, Turkey buketgultekinince@kilis.edu.tr Nowadays, knowledge has become important as a competitive weapon (Van Dierdonck et al., 1990) and competitive environment causes to pressure on organisations to impel their boundaries, when the aim is to be leader of the knowledge advancement. When there is an inter-organisational collaboration, more beneficial knowledge can be created compared to each organisation working alone, because integrative resources and capabilities that emanate from collaboration of organisations create synergy. (Santoro & Gopalakrishnan, 2000) Universities are establishments that have strategic roles such as education, scientific research and publication in the development of societies. The development of the welfare of the societies requires benefiting from scientific and technological studies effectively. Scientific thoughts should be integrated with the lifestyles of the society to show improvements. Relationship between researchers and external organisations is one of the most important ways for the transformation of the knowledge to practical implementations. (Çelik & Tufan, 2010) This paper focuses on relationship between universities that employ a lot of researchers and industrial establishments which perform practical implementations. Research on university-industry collaboration has increased in recent years because of globalisation. With the increasing of globalisation, competitiveness has become more significant than previous years. Firms, universities and other organisations must be strong to survive in their areas. To be strong they may need help about some issues. For instance, firms need to be innovative for new products or processes and universities need some funds for their research and development studies. Single case study will be used in this study and data will be collected by conducting interview with a specialist of university-industry collaboration development in Gaziantep University. This study proceeds as follows: First, industry-university collaboration will be explained. Secondly, components and obstacles of this relationship will be concatenated. Thirdly, the case of Gaziantep University will be indicated. Finally, some suggestions will be given on how to improve the productivity of university-industry collaboration. Keywords: industry, university, collaboration, knowledge transfer, technology transfer 69 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1535 Title A name given to the resource Improving the Productivity of Industry-University Collaboration: The Example of Gaziantep University Author Author GULTEKIN INCE, Buket Abstract A summary of the resource. Nowadays, knowledge has become important as a competitive weapon (Van Dierdonck et al., 1990) and competitive environment causes to pressure on organisations to impel their boundaries, when the aim is to be leader of the knowledge advancement. When there is an inter-organisational collaboration, more beneficial knowledge can be created compared to each organisation working alone, because integrative resources and capabilities that emanate from collaboration of organisations create synergy. (Santoro & Gopalakrishnan, 2000) Universities are establishments that have strategic roles such as education, scientific research and publication in the development of societies. The development of the welfare of the societies requires benefiting from scientific and technological studies effectively. Scientific thoughts should be integrated with the lifestyles of the society to show improvements. Relationship between researchers and external organisations is one of the most important ways for the transformation of the knowledge to practical implementations. (Çelik & Tufan, 2010) This paper focuses on relationship between universities that employ a lot of researchers and industrial establishments which perform practical implementations. Research on university-industry collaboration has increased in recent years because of globalisation. With the increasing of globalisation, competitiveness has become more significant than previous years. Firms, universities and other organisations must be strong to survive in their areas. To be strong they may need help about some issues. For instance, firms need to be innovative for new products or processes and universities need some funds for their research and development studies. Single case study will be used in this study and data will be collected by conducting interview with a specialist of university-industry collaboration development in Gaziantep University. This study proceeds as follows: First, industry-university collaboration will be explained. Secondly, components and obstacles of this relationship will be concatenated. Thirdly, the case of Gaziantep University will be indicated. Finally, some suggestions will be given on how to improve the productivity of university-industry collaboration. Keywords: industry, university, collaboration, knowledge transfer, technology transfer Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564 Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1042 Title A name given to the resource IN OTTOMAN TURKISH LITERATURE OVERVIEW OF FOREIGN LANGUAGE (ARABIC-PERSIAN) Author Author ÇETİNDAĞ, Yusuf Abstract A summary of the resource. From 13th to 19th century the Ottoman Turkish with Arabic and Persian literature have been constantly on the agenda, and has experienced considerable debate around these two strangers. Some of the Turkish language for considering these two know some poets said that the need to give attention. This paper will be addressed in discussions between the two facades. In particular, Ali Shir Nevai’s and Mahmud of Kashgar’s thoughts about this subject will be discussed. Date A point or period of time associated with an event in the lifecycle of the resource 2012-05-04 Keywords Keywords. Conference or Workshop Item PeerReviewed P Philology. Linguistics https://omeka.ibu.edu.ba/files/original/a6530e611aca6af5a043f33fdc434901.pdf eeae0c8c3a75629b16e280da59c73ed3 PDF Text Text 2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo In the Context of Basel II Accord, Capital Adequacy and Rating Feyyaz YILDIZ Assist. Prof. Dr., Afyon Kocatepe University Department of International Trade and Finance, feyyaz.yildiz@gmail.com Mustafa ÜÇ Assist. Prof. Dr., Epoka University Department of Business Administration mustafauc@epoka.edu.al Bilge Leyli ELĠTAġ Res. Assist., Afyon Kocatepe University Department of Business Administration bilgeleyli@gmail.com Cemal ELĠTAġ Assoc. Prof. Dr., Afyon Kocatepe University Department of Business Administration cemalelitas@gmail.com Idaver SHERIFI Epoka University, Department of Business Administration isherifi@epoka.edu.al Abstract: Basel II is a series of rules which brings new things and radical changes to the banking regulation standards. The basic reason of this change; while calculating the risk of the capital adequacy is taken into consideration and activities which forms the basic degree of Basel II‘s criterion. Especially Basel II criteria get heavy the circumstances of lending banks credits and in meantime the importance of rating marks in on the deal. In that study, reforms which bring Basel II the changing of the calculation of capital adequacy and in that way the criteria of rating and feasibility will be evaluated. Key Words: Basel, Rating, Capital Adequacy Introduction In order to create a series of rules which can regulate globalized financial markets and bring the banks in the global common standards, in 1974 the head of the central bank of ten developed countries with the participation of BIS (Bank for International Settlements), formed the "Basel Committee" (Aksoy, 2007, p. 21). This committee publishes regulations, recommendations and best practices of supervisory standards for banking authorities while making arrangements about the best way to adapt the system to their countries. In this way, the committee encourages member states' to harmonize common approaches and standards of surveillance techniques, without forcing them to converge in details. This Committee is collected 4 times per year and current members are Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, Netherlands, Spain, Sweden, Switzerland, United Kingdom and the United States of America (Doyrangöl and Saltoğlu, ismmmo.org.tr , 2009). In 1988, a capital measurement system, called Basel I has been prepared. Despite Basel I was developed for international banks operating in many countries, it began to spread widely. Once Basel I has been started and implemented, in various events some problems appeared and it started to be criticized. The problems which were occurred after starting the implementation of Basel I, are listed as below: 9 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo - Banks exposure to credit risk is calculated by separating in different classes the banks‘ assets and out of balance sheet items, and by multiplying the risk ranges of corresponding classes with 0%, 20%, 50% and 100% coefficients. - Basel I was tried to be applied equally to all banks of different areas of activity, because of lower risk sensitivity of Basel I, which uses four different risk weights. - According to the application known as ―OECD club rule‖, there is a predicted risk weight of 0% for governments of the countries members of OECD, 20% for the banks of those countries in case of debt, and 100% for countries which are not members of OECD. Because of these problems and the continuous changes in the market prices, Basel I was seen to be insufficient, and Basel Committee accelerated the work to develop the Basel II standards (Yardımcıoğlu and Çam, 2007, p.60-61). At the Accord of 1998, the market risk, which represents the whole of interest rates, exchange rates and changes in commodity prices was ignored to be part of capital adequacy and in 1996 market risk was added in capital adequacy calculation in USA. By taking into consideration this significant progress and other critics, in 1999 Basel Committee started preparing a new draft study for capital adequacy (Teker, Bolgün, Akçay, 2005). The Basel Committee, taking into account the developments occurring in the financial markets and the lack of measurements of capital adequacy of Basel I, in June 1999, published the initial advisory text for the New Basel Capital Adequacy Accord (Basel II). After that, at the beginning of 2001 the second advisory text was published, and in April, 2003 the third one. These advisory texts are revised and renewed based on opinions of countries‘ supervisor authorities, banks and other interested parties, and the final text of Basel II was published in June, 2004 (BDDK, 2005). In Turkey, BDDK (Banking Regulation and Supervision Agency) worked on this issue and in 30.05.2005 announced the transition roadmap to Basel II. In June 2006, a comprehensive document about this was prepared. However, European Union countries expected to complete the legislation until the end of 2006 and to start applying from 01.01.2007, and most of countries succeeded. Actually, in banking system of Turkey is applied the ―Regulation on measurement and evaluation of capital adequacy of banks‖, published in 01.11.2006 in Official Gazette of Republic of Turkey. Financial statements of sector should be prepared according to IFRS (International Financial Reporting Standards). Turkish Accounting Standards Board (TMSK), which arranges regulations from 2002, has completed their work. However, because of missing of obligatory legislation for the application of these standards, there was accordance with certain standards but the total transition has not been achieved. As a result, transition process was delayed again. Basel II regulations is a set of international rules, which effects banks because of radical changes envisaged in the financial system, and firms because of credit relations with banks (Aksoy, 2007). This arrangement with the banks' capital adequacy has been brought in an international standard. Capital adequacy ratio of this practice determined as 8%, at the beginning was applied to show the power of the financial structure of the banks and was used as a driving force to consolidate the capital structure of banks in a lot of countries (Aras, p. 4). Reconcillation of the Basel Basel I Regulations Basel I Capital Accord was published as new banking standards by Basel Committee. With this regulation are determined international capital adequacy standards which will be applied by the banks. These standards must be applied by banks with international activity, and define the lower limit of the capital that banks must have, towards the risk-weighted assets. The standard rate of minimum 8% known as ―Capital Adequacy Ratio‖, is based on the principle of increasing financial stability of banks, in the sense to control the risk by maintaining enough capital at the same rate. For this purpose, in Basel regulations, the minimum capital amount holded by the banks is applied as a criterion which indicates the financial stability of banks. In Basel I, during the setting of risk weight which is fundamental in calculation of the capital adequacy, is calculated the total credit risk of banks and market risk and in this way try to find a method which will show better the banks‘ exposure to the risks. In this context, the calculation of capital adequacy in Basel I, is as below: Total Capital -------------------------------- ≥ 8 Credit Risk + Market Risk However, during the implementation process of Basel I, it was seen that it is not possible to ensure the existence of a more robust and stable financial system only by providing the minimum capital adequacy (Aras, 2007, p. 4). 10 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo For example; According to one of the rule in Basel I accord, a bank‘s assets have to be classified into five risk groups (0, 10, 20, 50 and 100 percent) based on credit risk. This risk groups are determined in terms of the length of maturity date of related credit. If a bank lends 100 Euros for a year, this operation‘s risk is computed at 20% therefore bank has to allocate its 1, 6 Euros capital for this transaction in order to meet 8% the least capital adequacy ratio. But if the same amount lends for more than a year, bank has to allocate minimum its 8 Euros capital to meet minimum of requirement because the risk computation is made at 100%. When it is considered from the perspective of economic growth, this situation is unfavourable. Because long-term investments can be financed by long-term credits but risk grouping in Basel I accord discourages to banks to lend for long-term credits (Ariss and Sareddinne, 2007, p.48). Even only this case implies Basel I accord is not a sustainable regulation. Current methods used in measuring credit risk and market risk, to whom banks are exposed and that are defined in the Basel I, because of a not accure measuring of banking risk, not taking into consideration in the appropriate measure the price fluctuations of financial market and not being able to differentiate the behaviuor of banks during the creation of the portofolio, the revision of this standard has become a necessity, by extending the scope and restructuring with new management methods and methods for measuring the risk exactly. Therefore, it was understood that it was needed to be able to calculate in a right and exact way the effected risk, to provide financial stability, and to increase the compatibility of market conditions in order to improve the quality of market discipline for the crises that banks experienced. Basel I was criticized by global big players and academic community, because of its simple content. However, the simple content and easy implementation ability made Basel I more preferable and easely adaptable for developing countries. Basel I, contributed in the modernization of regulations and in increasing of competitivity in financial sector of these countries. Except the critics, there were recognized some positive aspects of Basel I, which creates a ―fair competition environment‖ with specified rules for market players, and because of 8% minimum capital adequacy, some developing countries have strengtht their financial stability (BDDK, 2005, p.2-3). The deficiencies identified in this process, made necessary the developing of a more complete regulation than Basel I. For this reason, Basel Committee redefined the bank‘s capital adequacy, by revising the components used for calculating it. The new regulation was named Basel II Minimum Capital Adequacy Accord since it was based on Basel I which was used from 1988. Basel II, must not be percepted as a new regulation because it is the continuity of Basel I, but there must not be ignored that predicted extremely important changes (Aras, 2007, p.4). Basel II Regulations The capital adequacy ratio calculated in Basel I framework, no longer accurately reflect the financial situation of the banks. In the days where the areas of activity of banks increase and there are intensive financial changes in the sector, the diversity and dimension of the risk also grows. Because the cost of banking crises to the economy reached at highest level, the need for effective risk management increased. Basel II Accord is formatted in accordance with emerging requirements, and as a result it is not only a well prepared comprehensive theoretical study but also achieved great success in practice. Being prepared based on suggestions and critics of concerning interested parties, this Accord provides the necessary flexibility of applicability (Aras, 2007, p.4). Basel Committee started working in order to update and correct deficiencies of Basel I and to help banks to make a better risk measurement, so in 2004 published the Basel II standards. Basel II criteria aim to regulate more efficiently the capital adequacy, to establish market discipline and supervision, and to enhance financial stability and risk management. With Basel II criteria, it is expected a reduction of informal economy, a better preparation of financial statements and a more effective working of banking system in Turkey (Yardımcıoğlu and Çam, 2007, p.61). Basel II consists of three complementary structural blocks:  Determination of the minimum capital requirements  Reviewing of supervision authority  Market discipline Determination of the minimum capital requirements Minimum capital requirement, which is the first rest of Basel II regulations, is calculated as a sum of credit risk, operational risk and market risk. Capital adequacy ratio is calculated as a legal capital and risk-weighted assets. According to the regulation, the total capital adequacy ratio should be as before, not below 8%. The total of risk- 11 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo weighted assets can be reached by multiplying the market and operational risk requirements with 12.5 (i.e. the opposite of 8% minimum capital requirement ratio) and by adding the reached amount to the total of risk-weighted assets of related credit risk (BaĢar, 2007, p.17). The Basel II capital adequacy is calculated as below: Total Capital --------------------------------------------------------- ≥ 8 Credit Risk + Market Risk + Operational Risk Market Risk is a probability to loss in positions held in balance sheet and off-balance sheet accounts, due to fluctuations in financial markets from shifts in prices of interest rates, exchange rates and stock prices, and as consequence of risk of interest rates ratio, stock risk and exchange rates risk. Shortly, this is a risk arising from the changes in interest rates and market prices so Basel II does not bring much change regarding this. Credit risk is the risk arising from possible credit losses. In general, it is the situation faced by the lender when the debitor fails to comply it‘s obligations of the contract complitely or partially. At the same time it indicates the situation of loss in market value, which is caused by deterioration in financial situation of counterparty. Counterparty may be the borrower of credit operations or the guarantor. Operational Risk is the risk arising from the wrong or insufficient internal managament, people, system and from other external events. Human errors, abuses, inadequate internal controls and business processes, and reasons arising from technological infrastructure and system, are likely to cause losses to the institution. Operational risk usually occurs rarely but causes big losses in financial system, as happened with Barings Bank, Allied Irish Bank, General Societe. The destructive effects in the cases of operational risk show as that to be protected it‘s enough only to hold capital. For this reason, it is very important and necessary to have a strong risk management (MazıbaĢ, 2005, p.12). In this case, risk measurement is very important. Risk Measurement Methods Risk Measurement Methods used in Basel II for calculating the capital requirement can be grouped as Internal Rating Method, Standard Method and Method of Basic Indicators. These groups are also divided into subgroups according to their levels of development. In the following tabel, there are presented different calculation methods for different categories, according to Basel II. The level of development of measurement Basic Medium Advanced Risk Credit Risk Standard Approach Market Risk Operational Risk Method of Basic Indicators Basic Internal Rating Approach Advanced Internal Approach based on Rating Standara Method Internal Model Standard and Alternative Standard Method Advanced Internal Rating Approach Table I. There are presented different calculation methods for different categories, according to Basel II (Arslan, sosyalbil.selcuk.edu.tr, 2009, p.54) Credit risk is calculated using standard method or advanced method, in other hand operational risk is calculated using method of basic indicator, standard method and advanced method. Using Standard Method, banks calculate the credit risk, based on the ratings given to the companies by the international institutions for external rating (S&P, Moodys, etc.). Whereas, using advanced method, banks calculate the credit risk using the rating given to the companies by themselves. According to this method, during the calculation of the credit risk, it must be considered also the probability of this credit to become problematic and the risk, maturity and other risk factors in this case (Doyrangöl and Saltoğlu, ismmmo.org.tr, 2009, p.359). Internal rating approach is more sensitive toward 12 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo risks, but is more complicated comparing to standard approach and needs more information; its application is more difficult and needs technical support (Doyrangöl and Saltoğlu, ismmmo.org.tr, 2009, p.359). This method is divided in two parts, basic internal method and advanced internal method. In Basic internal method, banks calculate theirselves the probability of credit to become problematic, using rating systems, but for other risk factors they use the coefficients determined by legal authorities. Whereas, advanced internal method gives the opportunity to banks to use thir own approaches in calculating all risk factors, but these approaches must be approved in advance by the regulatory authorities (Doyrangöl and Saltoğlu, ismmmo.org.tr, 2009, p.360). Reviewing of supervision authority Aims to make compatible the risk profiles and strategies of the banks by ensuring the necessary precaution and supervising. The regulation authority, can intervene if the capital of the bank isn‘t enough to encover the taken risk and if needed can request from the bank to hold more capital than minimum capital adequacy. Market discipline The providing of market discipline depends on feedbacks from risk assessments of the banks and evaluations of credit rating institutions. The aim is to complete the minimum capital requirements and the inspecting process of supervision authority. During this process, the steps taken to ensure the market discipline will help in a more effective and more rigorous valuation and work. By looking to Basel II framework, can be understood that there is a possible systematic risk in financial institutions and especially in banking sector (BaĢar, 2007, p.28-30). The aim of Basel II standards is to highlight the risk management in risk criteria of the banks. In this direction, with Basel II, the risk-based credit management and risk-based credit pricing becomes more important. The price of crediting will be determined depending on the risks of the company and the types of the guarantee. The firm's risk level will be considered as risk level of credit transactions (atonet.org.tr, 2009, p.2009). The difference between Basel I and Basel II The differences of Basel II from Basel I are as below:  The criteria of being or not a member of OECD, which was important in determination of capital adequacy for credit risk in Basel I, in Basel II is removed.  While in Basel I, capital requirement is only required for credit and market risk, in Basel II it is also included the capital requirement for operational risk. In Basel II, operational risk is defined as risk of wrong or insufficient internal managament, people, system and from other external events, so it is required from banks to hold capital to face this risk.  Basel II predicts banks to evaluate the capital adequacy, and process of selfevaluation of the bank and the capital adequacy should be evaluated and monitored by the banking supervision authority.  According to Basel II, detailed information regarding the implementation of Basel, must be published to the public. This wasn‘t included in Basel I.  In Basel II, the credit risk is determined by credit ratings of parties. For this, rating notes independent rating institutions can be used (Kutlu and Demirci, ulakbim.gov.tr, 2009, p.206). One of the innovations in Basel II is grading activities. The purpose of Basel II standards is to highlight the risk management in credit criteria of banks. With Basel II standards, the companies‘ risk weighting is linked to the credit rating. So, with starting of the implementation of the Basel II, the risk level of the credit and firms, affects directly the cost of the credit. For this reason, the credit rating given to the companies by independent rating institutions, gain importance. Rating Rating is the process of independent evaluation of a company or institution which issues securities, if the obligations of principal and interest are fulfilled or not. Reaching to the final note is done after evaluation of a lot of factors, starting from financial datas to managerial qualifications, past performance to future projects, etc. Rating process also includes the probability of delaying of a payment during the payment process of an issued security 13 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo (BabuĢçu, 1994, p.6). There are two main reasons of using the rating system by the banks and other credit agencies, to increase the transparency of the credit which will be given and to reduce the cost (BaĢar, 2007, p.56). Instability in interests of bank credits, increased competition among companies and increasing of unions, the development in wholesale money and capital markets, has obligated the companies to work on strengthening of their financial structure. For this reason, the need for credit rating increased because of expansion in the financial market, due to increasing of the number of the issuers of the securities and number of borrowers in other ways (BabuĢçu, 1994, p.10). By the use of Basel II accords credit rating agencies play to very crucial regulatory role in the banking sector which its failures associated with many social costs. Due to credit rating agencies have private ownership brings doubts about to sustainability of the regulation (Weber and Darbellay, 2008, p.2-3). Ratings may be long-term or short-term. Long-term rating is an opinion given to the companies based on the performance of the company and the main economic and financial characteristics of the sector, where the company operates. Important elements are: sensivity of economic conjucture, technological developments, changes in demand, legal arrangements, quality management and other. Rating in Long-term determines the possibility of fulfilling obligations. In short-term, rating is the evaluation of the opportunity to access liquidity and capital resources in order to fulfill all obligations for a period of a year. Rating is divided into international foreign exchange and local currency and evaluates the ability to pay the obligations in respective valutes (Berker, fitchratings.com.tr, 2009, p.12). The first legal regulations on the activities of rating agencies, was done in the USA, by the regulatory institution, known as Securities and Exchange Commission (SEC). Starting from 1975, SEC gives to the credit rating agencies which have market credibilty, the title NRSRO (Nationally Recognized Statistical Rating Organizations). Actually, there are only four NRSRO-s, Moody‘s Investors Service Inc; Fitch Inc; Standard and Poor‘s Inc and the last who get this status is Dominion Bond Rating Service Ltd. (Berker, fitchratings.com.tr, 2009). In Turkey, the companies who are acreditted by the Capital Markets Board of Turkey (SPK) are JCR Avrasya Derecelendirme A.ġ., TCR Kurumsal Yönetim ve Kredi Derecelendirme A.ġ., Saha Kurumsal Yönetim ve Kredi Derecelendirme Hizmetleri A.ġ., Kobirate Uluslararası Kredi Derecelendirme ve Kurumsal Yönetim Hizmetleri A.ġ and Fitch Ratings Finansal Derecelendirme Hizmetleri Aġ. (spk.gov.tr, 2010). Financial Institutions, evaluate the risk measurement based on the criteria of the worl rating institutions (agencies); According to Standart and Poor‘s company, the economy risk is very important for a bank to understand the environment. In fact, economic risk is not a credit quality of the bank but the risk level of the country‘s economy. Here, should be payed attention to the size of the economy, growth expectations, encountered structural problems, the course of the functioning of the economy and external opening of the national economy. The risk in the sector, industry structure, customer base, national and international regulations and public-private status must be reviewed. After that, what must be reviewed is the management and organizational structure, accounting compliance, liquidity situation, the level of using of assets and the institution's capital adequacy. Depending on credit risk, is reviewed the way of management of structure of bank‘s credit portfolio. In the case of market risk, evaluation is done according to risk measurement methods, preventive strategies, control, market monitoring mechanisms, and structure compliance with financial conditions. If these are gathered in four main categories then economic risk, sector risk, credit risk, and business risk can be evaluated (standardandpoors.com, 2009). According to Moody‘s, bank analysis is based on three basic principles. Those are, the role of the bank's operating environment, the role in the national financial system and bank‘s main analysis. In terms of Regulatory and Supervisory agencies, the role of the environment and competition structure are considered as reliable. In terms of the role in national financial system, are reviewed the government guarantees, the level of damage of the bank‘s bancruptcy to the national and international economy, the status of creditors in bankruptcy and the public-private status of the bank. Looking at the basic analysis of the bank, is observed the ability to use assets, financial and statistical data open for the public, profitability, management strategy, and using of the opportunities and creating values from them. Interest and exchange rate risk is also a very important topic to be evaluated (Boyacıoğlu, 2005). These worldwide rating agencies, considering the listed risk factors give the rating note. Note is given after calculating the risks and depending on capital adequacy is given a specific letter. The meanings of the leters are explained in this table. 14 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo S&P AAA Moody’s Aaa AA Aa A A BBB Baa BB Ba B B CCC Caa CC Ca C C D Meaning of the Note Shows an extremely strong capacity in repayments of principal and interests. Represents the highest credit quality and the lowest credit risk. Almost not affected at all from economic conditions. Shows a very strong capacity in payments of principal and interests. Not affected at all from economic conditions. Although have a positive attitude, should be dignified against negative economic changes. But the capacity to meet financial obligations toward creditors is still strong. Even has a capacity for principal and interest, should be taken the risk of delayin in payment in negative conditions. Negative changes can reduce the capacity. Is in the lowest rating category possible for investment. Speculative. In principal and interest repayments exists a moderate protection. Is exposed to continuous uncertainties or commercial financial and economic diasadvntages. Can fail to meet financial obligations. The risk of repayment is very high. The highest probability is that is speculative. It can pay financial obligations but to continue this situation depends on the economic conditions. Fulfilling of the financial obligations depends totally on good business and economic. There is a high probability for default status. There is a very high risk. Just started facing with problems in meeting financial obligations. This is the lowest quality note. There is a high risk borrower to don‘t be able to pay the obligations. Bankruptcy and similar situations can also be expressed. The worst note that can be given. Repayment is impossible. Shows the default status. Table II: The meanings of the leters In the Standard & Poor's rating system, putting "+"or "-" between "AA‖ and "CCC" diversifies the rating. For example, putting (+) on the right of "A" ("A+") shows that even though the rating of the country is below "AA‖, it is still slightly above "A". On the other hand, putting (-) shows that the credit rating is better than "BBB" but nevertheless slightly under "A". On the other hand, while giving credit ratings to countries Moody‘s uses numerical symbols such as 1, 2, 3 for each ratings group, from Aa to B. Symbol 1 shows the best level within the rating group concerning the debt payment capacity, symbol 2 the middle level, whereas symbol 3 refers to the weakest debt payment capacity within the group. The topics generally dealt by ratings agencies are: operational framework, risk profiles, funding and liquidity, shareholders' equity, profitability and performance, management and strategies, ownership and support criteria. In the context of Basel II, rating activities are carried out as internal rating (giving scores to companies by banks) and external rating (ratings issued by independent rating agencies such as S&P and Moody`s) activities. In the internal rating, banks evaluate at least the two-year financial and qualitative indicators on the credit activities (Mısırlıoğlu, ismmmo.org.tr, 2009). In order to do this, it should have a rating system to measure the credit worthiness and risk level of companies. According to these criteria, banks shall use two types of loans. In the case of demand for loans of less than one million Euros the retail portfolio is evaluated, in case the demand exceeds 1 million Euros, the institutional portfolio should also be used. During the conduct of internal rating, borrower`s risk, operational risks and the characteristics of these risks as well as whether there has been a delay in the credit payments. With regard to external rating, independent rating agencies are employed. Credits exceeding 1 million Euros and that are found in the institutional portfolio (category) of banks will be subject to rating by external rating agencies (Moody`s, Fitch, S&P, Duff etc.) and the credit ratings will be determined accordingly. These independent agencies take into consideration the country risk, market risk and company risk while conducting ranking. Independent rating agencies after carrying out evaluations on the financial situation of banks, give the ratings to banks as instruments that point out banks' credit worthiness and capacity to carry out obligations. In the context of the rating of bonds, apart from the debt securities exports by banks, financial strength ratings, individual ratings and support ratings (Alp and Üstğndağ, 2007). 15 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Basel II and importance of Ratings In case risks related to banks` activities materialize, the possessed capital to meet the losses incurred by clients and banks is very important. A good relation should be established between capital and risk so that they are affected only minimally by these losses. For this reason it is important to calculate the possessed minimum capital. Basel II is an arrangement for this purpose (kobifinans.com.tr, 2009). According to the Banking Regulatory and Supervisory Agency of Turkey, if analysed country`s perspective, Basel II can be considered as an opportunity to ensure a stronger and more efficient banking system. Some countries have fully implemented these standards and Turkey has made the necessary preparations to be ready for it. Some banks have even established Basel II departments and are waiting for the full transition stage. Delays in the full implementation of Basel II will principally result in increased costs. If full implementation is ensured, the efficiency of risk management at banks as well as their intermediation activities will increase. Market discipline which represents the main subject of Basel II will increase, the institutional governance structure of companies that are clients to banks will improve and it will also be ensured that the capital levels develop in parallel with their risk exposure. In the context of Basel I, domestic and foreign banks which invested in Turkey‘s Treasury securities were not required to hold capital for these securities. In the context of Basel II, since turkey has a low rating, a capital adequacy ratio of 8% is envisaged for foreign currency-denominated government securities (Eurobonds and foreign currency-denominated domestic debt securities. In fact, the possibility of non-repayment of the loan is related to who is given, but in present application, banks are applying the same approach to all companies with too high or too low credibility. Basel II separates the risk and adjusts it. However, the calculation of capital should be done according to risk. If the bank gives loans to a company with high risk, maybe will need to hold more capital than 8%. This is the logic in Basel II functioning (kobifinans.com.tr, 2009). Basel II brought two new different methods in credit risk measurement. These are standard method and basic internal rating method. There was no innovation in market risk measurement, but in new added operational risk are developed two methods, the basic and advanced measurement method. Credit risk can be defined as the risk of the probability of a party to not-fulfill the obligations to counterparty. With Basel II, as a result of risk-based pricing in credit risk calculation, the types of credits which require keeping more capital will be avoided or the prices will be increased, and the most important point will be to work with qualitative clients. There will not be any significant change in market risk, and in the same way the exchange risk, the interest rate risk, stock risk and liquidity risk will take place. The most important element that divide Basel II from Basel I is operational risk. According to Basel Committee, Operational Risk is the risk arising from the wrong or insufficient internal management, people, system and from other external events. On Basel I the most important risk is credit risk, and recent years‘ banking crises and fraud events within companies, highlights the importance of calculating of operational risk. This is one of the biggest indicators of the importance of Basel II. Related to Basel II the importance of degree is very important. The notes given by the rating agencies, are seen as the indicator for the borrower's risks. Many markets and institutions (banks, etc.), in this way reduces the research effort of individual investors and helps individual savers in evaluating of various investments (Çelik, 2004). Another important thing is ensuring the capital flows. Investors, who are interested to invest in international market, need the credit rating of specific company/business. Investing with a company, which note is known and where accountancy and transparence standards are evaluated, emphasize the importance of rating. Also, the companies who have rating notes, have the opportunity to access to a large investor audience, more credibility, trust and opportunity for more loans. Basel II and Ranking in Turkey The Capital Measurement and Capital Standards Harmonization in the International level document, established by Basel Committee on Banking Supervision has started to be implemented within a given transition by EU member states. In Turkey, Basel I criteria are still being implemented. According to the BDDK 2009 Basel II Progress Report, the % 39.8 of the sector's total asset size formed by banks on individual basis, and the % 29.7 formed by the banks of the consolidated Basel II- have submitted for approval or approved the implementation of the related strategies and policies by their board of directors. 99% of the banking sector, is composed by the top management and related units that will carry out the work of Basel II, 82% responsible staff and 70% the committees. 16 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo If we look at risk measurements, it can be seen clearly that there is a rising in using internal rating method and they are adapted to standard method, during the calculating process of risk. For market risk, all of banks comply the standard rating method, however for operational risk, most of banks use basic indicator method and the number of banks which use standard rating method is very limited. According to the results of quantitative impact studies, while the Basel-II reduces to the extent the capital adequacy of banks, the Turkish banking system's capital adequacy is high so due to these adverse effects they do not reach a significant size. According to the results of the local digital effects work, the 23 banks participating in the study had an aggregated capital adequacy ratio of 28.8% in the current situation and after applying the provisions of the Basel-II this ratio fall to 16.9%. If we take into account the minimum level of capital adequacy that is 8% we see that under the provisions of Basel-II that it‘s available a capital more than double the minimum level (BDDK, 2005). When we take a look to the implementation of Basel II for the past six months considering the developments, the most positive is being a member of the Basel Committee and the most negative development has been the global crisis. In addition the data deficiency and the lack of legislation and technology constitute a negative side. Turkey met with the rating activities in 1992. Moody's and S & P has given to Turkey for a long-term debt mark. After a series of falls experienced in 1994, 1995, 2001 the credit ratings currently is (B) as in the countries where investing should not be done and this prevents Turkey's borrowing ability from international debt markets (NYE and EKE, 2004, p.1). In this way the first time Turkey had met with the rating activities which continued with the beginning of the applicability of Basel II criteria. Conclusion Basel II regulations, in the context of the changes and improvements in the banking system means risk management. In the effective risk management, it is important to identify the credit risk, market risk and operational risk in the calculation of the capital adequacy which is the basic structural block of the Basel II. Other structural blocks provide the market discipline of risk management to develop effective monitoring mechanisms. It appears to be a fact that the further development of risk management in banks culture, indirectly will affect also the real sector firms which are in the position of the banks' customers. The most significant innovation Basel II has brought is the calculation of capital adequacy proportional to the risk in and the use of ratings. In the standard approach in the calculation of ratings, are used the notes based on the rating agencies, while in the internal approach banks are allowed to use their own notes in the ratings. The company internal ratings are based on such criteria as financial statements, market share and product quality. The most important criteria in the company rakings are the financial statements of companies. This is why the companies should be prepared from the results of banks ratings and need to strengthen their capital to get good grades. However, in standard method, international rating agencies by givin a rating note to banks, have an importan mision to be reference for banks if they have capability to carry out with the credit obligations or not. If the rating note is high, the financing costs is low, if rating note is low then the financing costs is high. The two reasons of rating are to increase the transparence and to decrease the cost. While some countries have passed to the Basel II standards Turkey is ready and getting well prepared. Some banks have also established a Basel II department and are waiting for the full shift to the standards. Despite the delays in the transition, this will return to us as a more cost. References Boyacioğlu, M. A., (2005). Bankalarda Derecelendirme (Rating) ve Türk Bankacılığı Üzerine Ampirik Bir ÇalıĢma (Doktora Tezi). Selçuk Üniversitesi Sosyal Bilimler Enstitüsü, Ünal Aysal Tez değerlendirme YarıĢama Dizisi. Aksoy, T. (2007). Basel II ve Ġç Kontrol, Ankara SMMM Odası Yayın No: 53, Ankara. Aksoy, T. (2007). Derecelendirme Süreci IĢığında Basel II‘nin Kobilere Etkileri ve Kobilerce Atılması Gereken Adımlar: Analitik Bir BakıĢ. Mali Çözüm ISMMMO Yayın Organı. Number: 84. Alp, Ali. ve Üstündağ, S. (2007), Active. Bankaların Derecelendirilmesi Ankara Ticaret Odasi., Basel II, Kobilerin Kredi Riski ve Derecelendirmesi, http://www.atonet.org.tr/yeni/files/_files/OZEL_IHTISAS_KOMISYONLARI/files/ato_basel.pdf-matbaa.pdf Access Date: 13.12.2009. 17 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo Aras, G. (2007). Basel II Bankacılık Düzenlemelerinin Ekonomiye ve Reel Sektöre Yansımalar, Deloitte. Aras, G. Basel II Uygulamasının KOBĠ‘lere Etkileri ve GeçiĢ Süreci. Ariss, R. T. and Sarieddine, Y. Challenges in implementing capital adequacy guidelines to islamic banks (p. 48). Y. Journal of Banking Regulation Vol. 9. Arslan, Ġ. Basel II Kriterleri ve Türk Bankaclık Sektörüne Etkileri http://www.sosyalbil.selcuk.edu.tr/sos_mak/makaleler/%C4%B0brahim%20ARSLAN/ARSLAN,%20%C4%B0BRAH%C4%B0 M.pdf. , Access Date: 01.12.2009. BabuĢçu, ġ. (1994). Bankacılıkta Risk Değerlendirmesi(Rating) ve Türk Bankacılık Sektörüne Uygulanması. Sermaye Piyasası Kurulu. BaĢar, M. (2007). Basel II Düzenlemeleri ve Kobiler, Anadolu Üniversitesi Yayınları. BDDK. (2005), Basel II Ekonomik Yansımaları ve GeçiĢ Süreci, AraĢtırma Dairesi. BDDK. (January 2005). 10 Soruda Yeni Basel UzlaĢısı (Basel II). BDDK. (September 2009), Bankacılık Sektörü Basel II Ġlerleme Raporu. BDDK. (2005), Basel II‘ye GeçiĢe ĠliĢkin Yol Haritası (Taslak). Berker, A. B., Kredi Derecelendirmesi. http://www.fitchratings.com.tr/ftp/derecelendirme/drc_20.pdf , Access Date: 25.12.2009. Berker, A.B., Derecelendirme KuruluĢları.. http://www.fitchratings.com.tr/ftp/derecelendirme/drc_23.pdf , Access Date: 27.11.2009. Çelik, P. (2004), Bankaların Risk Derecelendirmesi (Uzmanlık Yeterlilik Tezi). TCMB, Bankacılık ve Finansal KuruluĢlar Genel Müdürlüğü, Ankara. Doyrangöl, N. C. ve Saltoğlu, M., Muhasebeci Gözüyle Basel II. http://archive.ismmmo.org.tr/docs/malicozum/malicozum_kongreozel/19%20nurancomertdoyrangol.pdf , Access Date: 27.10.2009. Kutlu, H. A. ve Demirci, N.S. Kapsamlı Bir Risk Yönetimi Düzenlemesi: Basel II ve Kobilere Muhtemel Etkileri. http://uvt.ulakbim.gov.tr/uvt/index.php?cwid=3&vtadi=TPRJ%2CTTAR%2CTTIP%2CTMUH%2CTSOS&c=google&s_f=_5&d etailed=1&keyword=86942 ,14.12.2009. MazibaĢ, M., Operasyonel Riske Basel YaklaĢımı: Üç Yapısal Blok Çerçevesinde Bir Değerlendirme. BDDK AraĢtırma Rapoları, 2005/1. Misirlioğlu, Ġ. U., UFRS ve Basel II‘nin ĠĢletme Faaliyetleri Üzerindeki Etkileri. http://archive.ismmmo.org.tr/docs/malicozum/76MaliCozum/1ismailufukmisirlioglu.pdf , Access Date: 27.12.2009 NYE, R. P. ve Eke, S. (March 2004), Türkiye‘de Kredi Derecelendirmesi, Activeline. Rodoplu, G. ve Ayan E. (2008). Basel II UzlaĢısında Piyasa Risk Yönetimi ve Türkiye Açısından Faiz Riskine ĠliĢkin Bir Uygulama. Süleyman Demirel Üniversitesi ĠĠBF Dergisi. Teker,S., Bolgün, K.E., Akçay, M.B. (2005). Banka Sermaye Yeterliliği: Basel II Standartlarının Bir Türk Bankasına Uygulanması (p. 42-54). Elektronik Sosyal Bilimler Dergisi, www.e-sosder.com, Number: 12. Weber, H. R. and Darbellay, A. (2008), The regulatory use of credit ratings in bank capital requirement regulation (p.2-3). Journal of Banking Regulation Vol. 10. Yardimcioğlu, M.ve Çam, A. V. (2007). Sermaye Piyasalarındaki Derecelendirme Müessesesinin Basel II Kapsamında Değerlendirilmesi. Mali Çözüm ISMMMO Yayın Organı, Number: 80. www.kobifinans.com.tr, Access Date: 25.12.2009 www.spk.gov.tr, Access Date: 21.12.2009 18 �2nd International Symposium on Sustainable Development, June 8-9 2010, Sarajevo www.standardandpoors.com , Access Date: 25.12.2009 19 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 135 Title A name given to the resource In the Context of Basel II Accord, Capital Adequacy and Rating Author Author YILDIZ, Feyyaz ÜÇ, Mustafa ELİTAŞ, Bilge Leyli ELİTAŞ, Cemal SHERIFI, Idaver Abstract A summary of the resource. Basel II is a series of rules which brings new things and radical changes to the banking regulation standards. The basic reason of this change; while calculating the risk of the capital adequacy is taken into consideration and activities which forms the basic degree of Basel II‘s criterion. Especially Basel II criteria get heavy the circumstances of lending banks credits and in meantime the importance of rating marks in on the deal. In that study, reforms which bring Basel II the changing of the calculation of capital adequacy and in that way the criteria of rating and feasibility will be evaluated. Date A point or period of time associated with an event in the lifecycle of the resource 2010-06 Keywords Keywords. Conference or Workshop Item PeerReviewed HB Economic Theory https://omeka.ibu.edu.ba/files/original/cd5dbeb4f65df56089578d00cbaafdb3.pdf 64b7ada522937f040fc3d14a440c17a6 PDF Text Text International Conference on Economic and Social Studies, 10-11 May, 2013, Sarajevo In The Process of Global Crisis the Importance of Tourism in Decreasing Regional Development Differences: An Evaluation of Kastamonu Province in Turkey Serkan Dilek Kastamonu University, Kastamonu, Turkey serkan.dilek@gmail.com Orhan Kandemir Kastamonu University, Kastamonu, Turkey okandemir@kastamonu.edu.tr The possibilities of transferring sources to decrease regional development differences by public authorities have been limited in the process of global crisis. Kastamonu Province, that was studied in our study, has occupied 47th place between 81 Provinces according to socio-economic development ranking in The State Planning Organization* 2011 data. Using tourism potential of Kastamonu Province, that has important tourism potential according to SWOT analysis done in this study, will accelerate socio-economic development of Province. In the process of Global crisis, evaluating tourism potentials successfully in less developed regions such as Kastamonu province will provide opportunity to remove regional development differences without using more public sources. Keywords: SWOT Analysis, Regional Development Differences, Tourism Economy, Socio-Economic Development, Global Crisis. * The State Planning Organization was reorganized as the Ministry of Development in June 2011. 256 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 1620 Title A name given to the resource In The Process of Global Crisis the Importance of Tourism in Decreasing Regional Development Differences: An Evaluation of Kastamonu Province in Turkey Author Author DILEK, Serkan KANDEMIR, Orhan Abstract A summary of the resource. The possibilities of transferring sources to decrease regional development differences by public authorities have been limited in the process of global crisis. Kastamonu Province, that was studied in our study, has occupied 47th place between 81 Provinces according to socio-economic development ranking in The State Planning Organization* 2011 data. Using tourism potential of Kastamonu Province, that has important tourism potential according to SWOT analysis done in this study, will accelerate socio-economic development of Province. In the process of Global crisis, evaluating tourism potentials successfully in less developed regions such as Kastamonu province will provide opportunity to remove regional development differences without using more public sources. Keywords: SWOT Analysis, Regional Development Differences, Tourism Economy, Socio-Economic Development, Global Crisis. * The State Planning Organization was reorganized as the Ministry of Development in June 2011. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2013-05-10 Keywords Keywords. Article PeerReviewed Identifier An unambiguous reference to the resource within a given context ISSN 2303-4564