The evolution of Turkey’s banking system in early 2000s was a lesson to be learned for any emerging countries, even for the developed ones. Following the 1994 crisis, Turkish financial system had come to settle in a fuzzy equilibrium with a large nominal stock of carried by a handful of banks in a lucrative “carry trade”, and a large number of lemon banks involved in tunneling bank deposits to shareholders through connected lending. Unsurprisingly, the industry had to...