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Bank Lending in Turkey: Effects of Monetary and Fiscal Policies

Author

Listed:
  • Burcu Aydin
  • Deniz Igan

Abstract

We study the impact of monetary and fiscal policies on credit growth in Turkey using bank-level data from the last quarter of 2002 to the first quarter of 2008. We find evidence that the liquidity-constrained banks have a sharper decline in lending during contractionary monetary policies and that the crowding-out effect diminishes more for banks with a retail banking focus when the government adopts fiscal discipline. However, the results are statistically weak. Hence, the evidence is not strong enough to irrefutably document the bank lending channel and the impact of government finances on loan supply in Turkey even though these effects may be operational.

Suggested Citation

  • Burcu Aydin & Deniz Igan, 2012. "Bank Lending in Turkey: Effects of Monetary and Fiscal Policies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 48(5), pages 78-104, September.
    • Handle: RePEc:mes:emfitr:v:48:y:2012:i:5:p:78-104
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    Cited by:

    1. Ilyas Siklar, 2021. "Transmission of Monetary Policy through Credit Interest Rates in Turkey: A Microeconomic Perspective," Business and Economic Research, Macrothink Institute, vol. 11(4), pages 122-140, December.
    2. Ekin Ayse Ozsuca & Elif Akbostanci, 2012. "An Empirical Analysis of the Bank Lending Channel in turkey," ERC Working Papers 1205, ERC - Economic Research Center, Middle East Technical University, revised Aug 2012.
    3. Ekin Ayse Ozsuca & Elif Akbostanci, 2012. "An Empirical Analysis of the Risk Taking Channel of Monetary Policy in Turkey," ERC Working Papers 1208, ERC - Economic Research Center, Middle East Technical University, revised Dec 2012.
    4. repec:pra:mprapa:38783 is not listed on IDEAS
    5. Aydemir, Resul & Ovenc, Gokhan, 2016. "Interest rates, the yield curve and bank profitability in an emerging market economy," Economic Systems, Elsevier, vol. 40(4), pages 670-682.
    6. Moayedi, Vafa & Aminfard, Matin, 2011. "The Impact of Policy Shocks on Financial Structure: Empirical Results from Japan," MPRA Paper 39185, University Library of Munich, Germany.
    7. Neslihan Turguttopbas, 2017. "Perspectives on Monetary Policy and Cost of Capital: Evidence from Turkey," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 6(2), pages 45-64.
    8. Varlik Serdar & Berument M. Hakan, 2016. "Credit channel and capital flows: a macroprudential policy tool? Evidence from Turkey," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(1), pages 145-170, January.
    9. Etkin Ozen & Cem Sahin & Ibrahim Unalmis, 2013. "External Financial Stress and External Financing Vulnerability in Turkey : Some Policy Implications for Financial Stability," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 13(Special I), pages 65-74.
    10. Fatih Macit, 2012. "Who responds more to monetary policy, conventional banks or participation banks?," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 17(33), pages 10-14.
    11. Jale Minibas-Poussard & Haluk Baran Bingöl & Christine Roland-Levy & Erkin Diyarbakirlioglu & Tutku Seckin-Celik, 2020. "Money, banks, and savings: A comparative analysis of Turkish laypeople's social representations over five periods (1999-2017)," Post-Print hal-02919362, HAL.

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