AN APPRAISAL OF SMEs CURRENT SITUATION IN TURKEY BEFORE BASEL II

MAKING A START: PROBLEMS AND SOLUTIONS

.....Small and Medium Enterprises (SMEs) have significant importance in the Turkish economy as well as in the economies of many developing and developed countries. 99.5% of businesses operating in Turkey can be classified as SMEs. These companies provide employment to approximately 64% of workforce and contribute about 36% to the GDP.

.....SMEs have very significant share in the Turkish economy, but are easily affected by the changes in competitive and technological environments as well as alterations in rules and regulations governing business applications and economic activities. Because of advantages due to their lean organizational structure, SMEs can respond to changes faster than larger corporations. However, there are various disadvantages, such as managerial shortcomings caused by lack of professional managers and skilled employees, problems in the process of institutionalization, deficiencies in management information systems, and insufficiencies of capital, all of which are caused by an organizational structure common to all SMEs. Therefore, Basel II, one of the most important issues of the financial system in Europe, has been the center of attention of both credit companies and SMEs in Turkey, since this risk-based credit rating system will have radical effects on the types, limits, costs and terms of credits to be used by SMEs.

.....It seems the problems of SMEs in Turkey, already discussed and analyzed through various conferences, will be brought into focus once again within context of Basel II discussions. Izmir University of Economics has therefore decided to organize an International SME Symposium between May 01 and 03 of 2008. The main purpose of this organization is to provide a platform where

1. obstacles and problems awaiting Turkish SMEs before and during early phases of Basel II applications are identified, and can be analyzed and discussed and
2. solutions for potential problems can be explored and discussed.

.....This will be done by appraising the current situation of SMEs that have already been subject to Basel II criteria since early 2007 in both Turkey and Europe. Contributions from both the academic and business world are welcomed, and some of the issues of interests can be seen below. However, discussions and topics are not limited solely to the ones presented here.

• Basel II and Its Importance for SMEs in Turkey
• Applicability of Basel II in Turkey: Perspectives of SMEs
• Applicability of Basel II in Turkey: Perspectives of Credit Institutions
• SME Ratings According to Basel II: Procedures and Applications
• Foreseen Issues Prior to Basel II Applications: Problems and Solutions
• Impact of Basel II on Problems of SMEs
• Impact of Basel II on Current Financial Problems of SMEs
• Impact of Taxation and Other Legal Issues on Basel II Applications in Turkey
• Transparency of Financial Statements and Its Impact on Basel II
• Alternative Financing Methods for SMEs
• A General Overview at Basel II: Perspectives of SMEs
• A General Overview at Basel II: Perspectives of Credit Institutions

Sincerely.

Prof. Alev KATRINLI

Head of Department of Business Administration

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