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Demand and Competition Analysis in the Turkish Deposit and Credit Markets

Author

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  • G. Gulsun Akin
  • Ahmet Faruk Aysan
  • Sebnem Ileri
  • Levent Yildiran

Abstract

By estimating discrete choice multinomial logit demand models, we unveil consumer preferences in the Turkish deposit and credit markets in the 2002-9 period. We find that consumers prefer banks with larger networks and more efficient technologies in both markets. Borrowers are very responsive to interest rates, but depositors are not. We conclude that monopolistic competition prevails in both markets. However, banks' market power in the credit market is much lower than in the deposit market. Moreover, the comparison of demand elasticities in these two markets shows that credits will respond more than deposits to the taxes imposed on them, suggesting that loan provisions can be more effective than reserve requirements as a macroprudential policy tool to restrict credit growth.

Suggested Citation

  • G. Gulsun Akin & Ahmet Faruk Aysan & Sebnem Ileri & Levent Yildiran, 2013. "Demand and Competition Analysis in the Turkish Deposit and Credit Markets," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(S5), pages 41-58, November.
    • Handle: RePEc:mes:emfitr:v:49:y:2013:i:s5:p:41-58
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    Cited by:

    1. G. Gulsun Akin & Ahmet Faruk Aysan & Ezgi Özer & Levent Yildiran, 2018. "Consumer Preferences and Market Structure in Credit Card Markets: Evidence from Turkey," Working Papers 1258, Economic Research Forum, revised 19 Nov 2018.
    2. Canan Yildirim & Adnan Kasman, 2015. "Bank Market Power and Non-Interest Income in Emerging Markets," Working Papers 930, Economic Research Forum, revised Jul 2015.

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