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The Linkage Between Fiscal Policy and Non-Performing Household Loans in Turkey

Author

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  • Özen Ercan

    (Associate Professor, Faculty of Applied Sciences, University of Uşak, Turkey)

  • Hodžić Sabina

    (Associate Professor, Faculty of Tourism and Hospitality Management, University of Rijeka, Croatia, Primorska 46, POB 97, Ika, 51410 Opatija)

  • Yildirim Ahmet Eren

    (Assistant Professor, Faculty of Applied Sciences, University of Uşak, Turkey)

Abstract

Frequent changes in fiscal policies are the main cause of credit risk. To prevent households from increasing their non-performing loans, the government can use various policies and instruments. One of these tools is tax regulations, with a particular focus on the value-added tax. This paper examines whether tax policies have affected non-performing household loans in Turkey over the period from 2017 to 2021. To acquire meaningful empirical results, the Autoregressive Distributed Lag (ARDL) cointegration model have been applied. The results of analysis indicated that the effect of tax regulations on non-performing household loans is quite strong. It can be demonstrated that the strength of the income effect generated by tax cuts might be robust.

Suggested Citation

  • Özen Ercan & Hodžić Sabina & Yildirim Ahmet Eren, 2022. "The Linkage Between Fiscal Policy and Non-Performing Household Loans in Turkey," South East European Journal of Economics and Business, Sciendo, vol. 17(2), pages 113-124, December.
    • Handle: RePEc:vrs:seejeb:v:17:y:2022:i:2:p:113-124:n:3
    DOI: 10.2478/jeb-2022-0018
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    More about this item

    Keywords

    non-performing loans; household finance; fiscal policy; Turkey;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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