Regulating Check Use in Turkey
This paper develops a simple model of the market for checks in Turkey. The Central Bank controls the lump-sum amount that the drawee banks are legally responsible to pay per bad check. An increase in this amount is believed to support real economy. I show that banks will tend to restrict the quantity of checks when this responsibility is increased. A percentage point increase in banks' obligation per bad check could lead up to a 1.7 percent decline in the total supply of checks on the margin. This means that a rise in this obligation may harm the real economy rather than providing support.
Volume (Year): 12 (2012)
Issue (Month): 1 ()
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- Ping He & Lixin Huang & Randall Wright, 2005. "Money And Banking In Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 637-670, 05.
- James McAndrews & William Roberds, 1997.
"A general equilibrium analysis of check float,"
97-4, Federal Reserve Bank of Atlanta.
- Tumen, Semih, 2012.
"Regulation and the market for checks,"
Elsevier, vol. 29(3), pages 858-867.
- Semih Tumen, 2010. "Regulation and the Market for Checks (Duzenlemeler ve Cek Piyasasi)," Working Papers 1006, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
- Ricardo Lagos, 2006. "Inside and outside money," Staff Report 374, Federal Reserve Bank of Minneapolis.
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