Bank Lending in Turkey: Effects of Monetary and Fiscal Policies

October 1, 2010

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Burcu Aydin, and Deniz O Igan. Bank Lending in Turkey: Effects of Monetary and Fiscal Policies, (USA: International Monetary Fund, 2010) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The period following the 2000-01 crisis was marked by a successful disinflation program sustained through inflation targeting and fiscal discipline in Turkey. This paper studies the impact of monetary and fiscal policies on credit growth during this period. Using quarterly bank-level data covering 2002-08, we find evidence that liquidity-constrained banks have sharper decline in lending during contractionary monetary policies and that crowding-out effect disappears more for banks with a retail-banking focus when fiscal policies are prudent.The results are statistically weak, suggesting that bank lending channel is not strong in Turkey and government finances has limited direct impact on credit.

Subject: Bank credit, Banking, Commercial banks, Credit, Financial institutions, Fiscal policy, Loans, Money

Keywords: Bank assets, Bank credit, Bank ownership, Banking sector, Central bank, Commercial banks, Contractionary fiscal policy, Credit, Credit supply, Fiscal policy, Fiscal policy variable, Inflation rate, Lending channel, Loans, Monetary policy, Money market, Panel data, Transmission mechanism, WP

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2010/233
Stock No:

WPIEA2010233
ISBN:

9781455209330
ISSN:

1018-5941

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