Features of the development of banks in the Ottoman Empire in the middle of the XIX – early XX centuries

   Introduction. The development of banks in the Ottoman Empire is a complex topic in domestic and foreign historiography. Eastern societies, especially Muslim ones, have long had a negative attitude towards banking activities, considering it an offspring of an alien Western culture, using the services of traditional structures. In this article, the author endeavours to show the development of banks in the country from the 1820^s – 1830^s to the First World War. The article highlights the important role of the Galata banking houses owned by Greeks, Armenians and Jews in establishing the credit and financial system in the Ottoman Empire. They served the interests of the Porte and financed foreign economic transactions.

   Materials and Methods. The work has an interdisciplinary character, since it is carried out at the intersection of history, history of economics, economics, and statistics. Classical methods of historical science were used.

   Analysis. In the middle of the 19^th century, the banking houses of Galata found themselves in a difficult situation, especially in the context of galloping inflation. The Ottoman Empire needed modern banks with considerable resources. This article stresses that only foreign banks could successfully carry out this task and highlights a number of stages in the development of the process. The British capital had dominated the country during the 1860-70^s while the French and German banking capital started to gain access to the empire in the 1880^s. By World War I, more than half of the country’s banking assets belonged to French banks. The author raises a complex problem of the development of national banks in the Ottoman Empire. Most of them could not compete with foreign banks, except for the «Agricultural Bank», which was a successful example of modern bank development in a traditional society that enjoyed great confidence from the local population, who formed a new financial culture. Therefore, it willingly invested its savings in deposits.

   Results. The author concludes that despite the achievements in establishing modern banks, there was a severe shortage of bank branches and representative offices, especially in the remote parts of the empire. Consequently, a large part of the population had to turn to traditional banking houses and moneylenders, which, contrary to the law, inflated the interest rates. The Ottoman Empire needed further expansion of the presence of foreign banks and, most importantly, the establishment of large national banks capable of becoming the flagships of the modern economy in the country.

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