Öz The system which activites and channels In an economy, millions of savings from fund suppllers to fund users by using various techniques and means is called financlal markets.Basic functions of flnancial markets are by linking savings and investments, to chanel the funds lnto most beneficial investment projects. to distribute them effectively between consumers and investment projects, and to contribute to the creation of wealth. Flnancial markets compose of three main elements such as fund suppliers, fund users, and financial institutions and means.One of the most imoortant of these means is financial institutions. Since the majority of the items on the assets side of the balance sheet compose of cash, receivables, common stocks and bands, activities of financlal institutions concentrate an financial assets. Basicly, their incomes cover transactions related to financlal means. On this respect, Trading Banks come the flrst.In Turkiye, Trading Banks, as in the western countries, are lnstitutions that transfer to individuals or associations funds such as time and deposit accounts, rediscound and advance transactions of the central bank, acceptance and capital. In an economy, increases in general price levels, that is, inflation, inflvence these institutlous neqatively as well. Morenver. these institutions are affected more compared to industrial ones. Likewise, as mensioned above, slnce the ratio of financial assets in their total assets relatively high, loss in purchasing power and gains may be greater.The purpose of this artlcles to examine and deflne the effeets of inflation whieh has been prevailing in our country in recent years on interest rates and banking system.