Bank Lending in Turkey: Effects of Monetary and Fiscal Policies

Author/Editor:

Burcu Aydin ; Deniz O Igan

Publication Date:

October 1, 2010

Electronic Access:

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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.

Series:

Working Paper No. 2010/233

Subject:

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

English

Publication Date:

October 1, 2010

ISBN/ISSN:

9781455209330/1018-5941

Stock No:

WPIEA2010233

Pages:

33

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