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The Growth Effects of Deposit to Loan Conversion in Turkey; Is Consumption Drawn? Is Investment Prompted?

Author

Listed:
  • Nesibe DEMIR BINGOL
  • Murat BINGOL
  • Omer Selcuk EMSEN

Abstract

In this study, it is aimed to empirically examine the results of the final effect of the conversion rates of deposits, which are the main fund source of the banking sector as is the most widespread financial actor within the financial system in Turkey, to consumer and investment loans on economic growth. In the study, the effects of the conversion rates of consumer and investment loans on economic growth in the conversion of total deposits to total loans during the 2006:Q1-2020:Q4 period in Turkey were examined theoretically with the help of two different models developed by including the banking sector data to the Solow growth model. In the findings obtained from the time series analysis, it has been determined that the consumer loans have negative effects and the investment loans have positive effects on the growth of the Turkish economy. The results show that the credit creation mechanism prioritizing and supporting the consumption as a growth motif in the Turkish economy, does not have positive effects on growth, on the contrary, the short-term revival has negative effects in the long term. The study reveals that it is necessary to operate the mechanisms that will transform from a crediting form prioritizing the consumption to a crediting form prioritizing and encouraging the investment for sustainable economic growth in Turkey where savings are not at a sufficient level.

Suggested Citation

  • Nesibe DEMIR BINGOL & Murat BINGOL & Omer Selcuk EMSEN, 2022. "The Growth Effects of Deposit to Loan Conversion in Turkey; Is Consumption Drawn? Is Investment Prompted?," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 16(1), pages 27-61.
    • Handle: RePEc:bdd:journl:v:16:y:2022:i:1:p:27-61
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    More about this item

    Keywords

    Financial markets; deposits and loans; economic growth; time series analysis.;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • 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

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