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Endogeneity of Money Supply : Evidence From Turkey

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  • Ibrahim Ethem Guney
  • Oguzhan Cepni

Abstract

[EN] There is a long discussion among academics and central bankers about the theories of money supply. According to the exogenous view, central banks have full control over money supply via policy actions including the adjustments of interest rates and reserve ratios, both of which alter commercial banks’ lending decisions. However, the theory of endogenous money supply emphasizes the role of demand for bank loans in money creation. More specifically, banks create money by meeting the demand of economic agents. In this study, we investigate which of the money supply theories holds in the Turkish economy for the period 2006-2015 by employing cointegration and causality tests. Our findings show that the relation runs from bank loans to money supply both in the short and long terms, which supports the endogenous view in a sense that central bank and the banks fully meet the total demand for money in the Turkish economy. [TR] Akademisyenler ve merkez bankacilari icinde para arzi teorileri ile ilgili uzun suredir devam eden bir tartisma bulunmaktadir. Dissal bakis acisina gore, merkez bankalari ticari bankalarin borc verme kararlari uzerinde etkili olan faiz ve rezerv oranindaki degisiklikleri iceren politika adimlari ile para arzi uzerinde tam kontrole sahiptir. Ancak, para arzinin icselligi teorisi para olusturmada banka kredilerine olan talebin rolunu vurgulamaktadir. Diger bir deyisle, bankalar iktisadi ajanlarin taleplerini karsilayarak para olusturmaktadir. Bu calismada, esbutunlesme ve nedensellik testleri kullanilarak 2006-2015 yillari arasinda Turkiye ekonomisi icin hangi para arzi teorisinin gecerli oldugu incelenmektedir. Bulgularimiz, hem kisa hem de uzun vadelerde nedenselligin banka kredilerinden para arzina dogru oldugunu gosterdiginden, Turkiye ekonomisinde Merkez Bankasi ve bankalarin toplam para talebini karsiladigi ve para arzinin icsel oldugu goruslerini desteklemektedir.

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  • Ibrahim Ethem Guney & Oguzhan Cepni, 2016. "Endogeneity of Money Supply : Evidence From Turkey," CBT Research Notes in Economics 1619, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:econot:1619
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