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The credit volume and its relations with money supply in Turkey: the Bai-Perron and Wavelet coherence analysis

Author

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  • Bilgehan Tekin

    (Faculry of Economics and Adminisrative Sciences, Çankırı University)

  • Fatma Temelli

    (Ağrı İbrahim Çeçen University)

Abstract

Structural breaks in credit volume refer to sudden and significant changes in the extent to which credit is extended by financial institutions. These breaks can occur for various reasons, such as changes in lending standards, shifts in economic conditions, or changes in government policies. A structural break in credit volume can have important implications for the broader economy, including impacts on economic growth, inflation, and financial stability. This study focuses on multiple structural breaks and the relationship with the money supply of the credit volume of deposit banks from 2006 to 2022 when vital economic, financial, political, and social developments were experienced in Turkey and the world. The Central Bank of the Republic of Turkey provides the data used in the analysis, including the total loans provided to economic actors by deposit banks. Bai and Perron’s multiple structural break test and wavelet coherence methods were used for the data analysis. As a result of the study, five structural break dates in credit volume were determined, and the reasons for these breaks were emphasized. Furthermore, wavelet coherence analysis shows that money supply and credit volume move together in the long run.

Suggested Citation

  • Bilgehan Tekin & Fatma Temelli, 2024. "The credit volume and its relations with money supply in Turkey: the Bai-Perron and Wavelet coherence analysis," Ekonomski pregled, Hrvatsko društvo ekonomista (Croatian Society of Economists), vol. 75(5), pages 363-379.
    • Handle: RePEc:hde:epregl:v:75:y:2024:i:5:p:363-379
    DOI: 10.32910/ep.75.5.1
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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