IDEAS home Printed from https://ideas.repec.org/a/ahs/journl/v11y2026i2p398-433.html

Credit and Exchange Rate Channels of Monetary Transmission under Multiple Policy Regimes: Evidence from Türkiye, 2011–2025

Author

Listed:
  • Murat Beşer
  • İpek M. Yurttagüler
  • Sinem Kutlu Horvath

Abstract

This study investigates the credit and exchange rate channels of the monetary transmission mechanism in Türkiye under different policy regimes using monthly data covering the period from January 2011 to December 2025. The analysis is conducted within a six-variable Vector Error Correction Model (VECM) framework, including the Central Bank of the Republic of Türkiye’s weighted average funding cost, bank credit, the nominal USD/TRY exchange rate, the real effective exchange rate, industrial production, and CPI inflation. Johansen and Gregory-Hansen cointegration tests, impulse response analysis, forecast error variance decomposition, Toda-Yamamoto causality tests, and structural break and regime-switching analyses are employed. The results show that monetary policy shocks generate a persistent decline in bank credit, confirming the robustness of the credit channel across alternative model specifications. In contrast, the direct effect of monetary policy on inflation appears more sensitive to model specification and sample period. Variance decomposition indicates that exchange rate variables explain a substantial share of inflation dynamics. Overall, the findings suggest that the credit and exchange rate channels remain key components of the monetary transmission mechanism in Türkiye, with their effectiveness varying across different policy regimes.

Suggested Citation

  • Murat Beşer & İpek M. Yurttagüler & Sinem Kutlu Horvath, 2026. "Credit and Exchange Rate Channels of Monetary Transmission under Multiple Policy Regimes: Evidence from Türkiye, 2011–2025," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 11(2), pages 398-433.
    • Handle: RePEc:ahs:journl:v:11:y:2026:i:2:p:398-433
    DOI: 10.30784/epfad.1909100
    as

    Download full text from publisher

    File URL: https://dergipark.org.tr/tr/download/article-file/5811962
    Download Restriction: no
    File URL: https://libkey.io/10.30784/epfad.1909100?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ahs:journl:v:11:y:2026:i:2:p:398-433. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ersan Ersoy (email available below). General contact details of provider: https://epfjournal.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.