The Bank Lending Channel of Monetary Transmission: Does It Work in Turkey?
AbstractDoes the bank lending channel of monetary transmission work in Turkey? Using the May- June 2006 financial turbulence as an exogenous shock that prompted a significant tightening of monetary policy, this paper examines the loan supply response of Turkey's banks, depending on their balance sheet characteristics. The empirical results indicate that banks can play a role in Turkey's monetary transmission mechanism. Specifically, bank liquidity is found to have a significant effect on loan supply in Turkey. This suggests that the effect of monetary policy in Turkey can be propagated by the banking sector, depending on its liquidity position.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 07/272.
Date of creation: 01 Dec 2007
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-05 (All new papers)
- NEP-BAN-2008-01-05 (Banking)
- NEP-CBA-2008-01-05 (Central Banking)
- NEP-CWA-2008-01-05 (Central & Western Asia)
- NEP-MAC-2008-01-05 (Macroeconomics)
- NEP-MON-2008-01-05 (Monetary Economics)
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