ERC Homepage ERC Homepage
ERC Lectures in Economics
ERC Working Papers
Executive Committee
About ERC
METU Home Page
Department of Economics


02/03 Credit transmission mechanism in Turkey: An empirical investigation

02/03 Credit transmission mechanism in Turkey: An empirical investigation

Tarkan Çavusoglu

Abstract: The purpose of the study is to empirically test the presence of a bank lending channel in the Turkish economy. The empirical investigations are focused on the bank lending behaviour of 58 deposit money banks in the Turkish banking system over the period 1988-1999. The estimation methodology of the empirical analysis differs from that of similar studies in the literature, providing econometrically more efficient model estimates through exploiting dynamic panel data modelling with Generalized Method of Moments estimations.

The results of the model estimations provide no evidence of a potential for a bank lending channel to exist in the Turkish economy. Such an outcome is reflected in the lack of a significant relationship between the change in the monetary policy indicator and the growth rate of the loan supply in the estimated models. Categorizing the loan supply responses of banks with respect to bank size differences has not provided any significant improvement in revealing the evidence of a bank lending channel. The empirical results indicate that bank lending behaviour is influenced significantly by bank specific factors, such as the balance sheet strength and the quality of the asset portfolio, and by debt sales to the banking system.

JEL Classification: E42, E51, G21

Keywords: credit channel, bank lending channel, dynamic panel data, Turkey

Full Text (In Adobe Acrobat format)


2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996