Does the Bank Lending Channel of Monetary Transmission Work in Turkey?

Petya Brooks

No 2007/272, IMF Working Papers from International Monetary Fund

Abstract: Does the bank lending channel of monetary transmission work in Turkey? Using the May- June 2006 financial turbulence as an exogenous shock that prompted a significant tightening of monetary policy, this paper examines the loan supply response of Turkey's banks, depending on their balance sheet characteristics. The empirical results indicate that banks can play a role in Turkey's monetary transmission mechanism. Specifically, bank liquidity is found to have a significant effect on loan supply in Turkey. This suggests that the effect of monetary policy in Turkey can be propagated by the banking sector, depending on its liquidity position.

Keywords: WP; bank; loan; lending channel (search for similar items in EconPapers)
Pages: 11
Date: 2007-12-01
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Citations: View citations in EconPapers (16)

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