The government was already running enormous budget deficits, and one of the ways it managed to sustain these was by selling huge quantities of high-interest bonds to Turkish banks.
Continuing inflation (likely a result of the enormous flow of foreign capital into Turkey) meant that the government could avoid defaulting on the bonds in the short term.
[3] However, there was much public distraction caused by leader of the Welfare Party Necmettin Erbakan's threats to investigate Çiller for corruption.
On 21 February 2001, during a quarrel in a National Security Council meeting, President Ahmet Necdet Sezer threw the constitutional code book at the elderly Prime Minister Bülent Ecevit, sparking a full-blown crisis.
As foreign investors observed the political turmoil and the government's attempts to eliminate the budget deficit,[6] they withdrew $70 billion worth of capital from the country in a matter of months.
[8] By 2000 there was massive unemployment, a lack of medicine, tight credit, slow production to fight inflation and increasing taxes.
The stock market crash revealed Turkey's economic situation to be not only extremely fragile but also entirely dependent on foreign investment.
Although not as significant as decreased foreign investment or the massive budget deficit, the crash highlights Turkey's recent political instability.