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The Effect of Interest Rates on Consumer Credit in Turkey

Author

Listed:
  • Mustafa Ibicioglu
  • Mehmet Baha Karan

Abstract

This paper investigates the effect of the variation in the interest rates on consumer credit. The interest rate plays the central role in the regressin model as the main independent variable affecting consumer credit demand. The relationship between consumer credit and Istanbul Stock Exchange (ISE) national index as well as consumer confidence index is also investigated as these variables are considered to reflect the economic expectations. It is concluded that consumer credit demand is sensitive to the variations in the interest rates based on the regression model using monthly data covering the 2004:4 2009:2 period. On the contrary, consumer confidence index and ISE national index are found not to have a statistically significant effect in explaining the variation in consumer credit

Suggested Citation

  • Mustafa Ibicioglu & Mehmet Baha Karan, 2009. "The Effect of Interest Rates on Consumer Credit in Turkey," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 3(2), pages 11-30.
  • Handle: RePEc:bdd:journl:v:3:y:2009:i:2:p:11-30
    as

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    File URL: http://www.bddk.org.tr/WebSitesi/turkce/Raporlar/BDDK_Dergi/73761.%20makale.pdf
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    References listed on IDEAS

    as
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    5. Riad A Ajami & David A Ricks, 1981. "Motives of Non-American Firms Investing in the United States," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 12(3), pages 25-34, September.
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    7. Kálmán Kalotay, 2004. "Outward FDI from Central and Eastern European Countries," Economic Change and Restructuring, Springer, vol. 37(2), pages 141-172, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Consumer Credit; Interest Rates;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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