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A brief assessment of Turkey's macroprudential policy approach : 2011–2015

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  • Hakan Kara

Abstract

The predominant role of cross border financial flows for macroeconomic and financial stability has imposed complex policy trade-offs for emerging economies, especially after the global financial crisis. This note provides a brief account of the macroprudential policy approach adopted in Turkey between the years 2011 and 2015, a period when global capital flows exhibited unprecedented volatility. Special emphasis is put on the use of monetary policy tools for macroprudential purposes. We first highlight the particular role of external flows and the associated tradeoffs in designing the monetary policy and macroprudential policy framework. Next, we describe the policy implementation by the central bank and the regulatory authorities, and evaluate the consequent outcomes. Our analysis suggests that macroprudential policies have improved external balances, dampened financial amplification channels, and reduced the sensitivity of the Turkish economy to capital flows.

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  • Hakan Kara, 2016. "A brief assessment of Turkey's macroprudential policy approach : 2011–2015," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 16(3), pages 85-92.
    • Handle: RePEc:tcb:cebare:v:16:y:2016:i:3:p:85-92
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    11. Monika Bucher & Achim Hauck & Ulrike Neyer, 2020. "Interbank market friction-induced holdings of precautionary liquidity: implications for bank loan supply and monetary policy implementation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(1), pages 165-222, July.
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    More about this item

    Keywords

    Macroprudential policy; Monetary policy; Capital flows; Credit growth; Emerging markets;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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