Bank Lending in Turkey: Effects of Monetary and Fiscal Policies

Burcu Aydin () and Deniz Igan

No 10/233, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Bank credit; Banking crisis; Banking sector; Credit expansion; Monetary transmission mechanism (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-cba, nep-cfn, nep-fdg, nep-mac and nep-mon
Date: 2010-10-01
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Journal Article: Bank Lending in Turkey: Effects of Monetary and Fiscal Policies (2012)
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