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Exchange Rate Private Sector Debt Nexus: Lessons from Turkish Experience

Author

Listed:
  • Kidemli, Melek

    (Nevsehir Haci Bektas Veli University)

  • Surekci Yamacli, Dilek

    (Nuh Naci Yazgan University)

Abstract

External debt stock of the private sector is increased from 2002 to 2018 in Turkey. In this period, Turkish Lira depreciated against foreign currencies. This study is investigated the relationship between real exchange rate and private sector external debt during the period 2002-2018 in Turkey. Auxiliary variables included in the model are LIBOR, domestic interest rates and real GDP. Application methods of the study are Delayed Distributed Autoregressive Model (ARDL) and Error Correction Model (ECM). Results of the study shows that, respectively domestic interest rate, LIBOR and exchange rate effective variables on the private sector external borrowing in the long term. Beside, exchange rate’s effects on the private sector external debt is higher in the short term than long term. Other hand, there is no relationship between private sector external borrowing and domestic production in the short and long term.

Suggested Citation

  • Kidemli, Melek & Surekci Yamacli, Dilek, 2020. "Exchange Rate Private Sector Debt Nexus: Lessons from Turkish Experience," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 11(1), pages 51-62, January.
    • Handle: RePEc:ris:buecrj:0455
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    More about this item

    Keywords

    Private Sector External Borrowing; Real Exchange Rate; Borrowing; ARDL; ECM;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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