Decriminalizing the Issuance of Bad Checks in Turkey. An Analysis of the Effects of Changes in Penalties

25 Pages Posted: 21 May 2015 Last revised: 31 May 2017

See all articles by Basak Babaoglu

Basak Babaoglu

University of Hamburg

Alexander J. Wulf

SRH Berlin University of Applied Sciences

Date Written: May 20, 2015

Abstract

The aim of this study is to carry out an economic analysis of the consequences that arose following the decriminalization of the issuance of bad checks in Turkey. In our statistical analysis we examined the legal situation of bouncing checks in three periods: before 2009 when the issuance of bad checks was subject to imprisonment, between 2009-2012 when a partial decriminalization took place and between 2012-2014 when the issuance of bouncing checks was fully decriminalized and penalties were reduced to only administrative fines. We test the hypotheses that partial or full decriminalization led to a rise in the number of bad checks in Turkey. We find that there is no statistical evidence for an association between the first, modest step of the decriminalization process (Law No. 5941) and the frequency with which checks bounced in Turkey. However, full decriminalization of bouncing checks (Law No. 6273) led to an increase in the frequency of bad checks. We also find that the establishment of a Risk Center by the Bank Association of Turkey helped to identify customers not worthy of credit and was successful in decreasing the frequency of bad checks. We conclude that in the case of Turkish check law imprisonment was more effective in deterring writers of bad checks than the administrative and civil sanctions that are now in place. Nonetheless, private credit screening efforts also promoted the targeted policy goal of limiting the number of bad checks in Turkey.

Keywords: Checks, bad checks, decriminalization, criminal penalties, administrative sanctions and fines, Turkey

JEL Classification: K, E, G

Suggested Citation

Babaoglu, Basak and Wulf, Alexander J., Decriminalizing the Issuance of Bad Checks in Turkey. An Analysis of the Effects of Changes in Penalties (May 20, 2015). Babaoglu, B. & Wulf, A.J. Eur J Law Econ (2016) 42: 5. doi:10.1007/s10657-015-9502-3, Available at SSRN: https://ssrn.com/abstract=2608374

Basak Babaoglu

University of Hamburg ( email )

Allende-Platz 1
Hamburg, 20146
Germany

Alexander J. Wulf (Contact Author)

SRH Berlin University of Applied Sciences ( email )

Ernst-Reuter-Platz 10
Berlin, Berlin 10587
Germany
+49 (0) 30 374 374 502 (Phone)
+49 (0) 30 374 374 375 (Fax)

HOME PAGE: http://www.srh-hochschule-berlin.de/de/hochschule/hochschulteam/wulf-alexander-j/

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