The Bank Lending Channel In Turkey: Effect of Capital Adequacy Ratio

Cihan Aktas and Bedri Tas

Journal of BRSA Banking and Financial Markets, 2007, vol. 1, issue 1, 61-76

Abstract: This paper empirically analyzes the effect of monetary policy changes on loan supply of Turkish banks and presents the evidence that bank lending channel of monetary policy transmission mechanism is operating through the capital adequacy of Turkish banks. By using the CAR as an indicator of capital constraint we show that banks that do not have capital constraints respond more to monetary policy. Also, banks with different CAR react differently to monetary policy changes. We show that the asymmetric effect of CAR may help to explain the mixed results in the empirical literature about the bank lending channel.

Keywords: Monetary Transmission Mechanism; Bank Lending Channel; Capital Adequacy Ratio (search for similar items in EconPapers)
JEL-codes: E42 E51 E52 G21 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:bdd:journl:v:1:y:2007:i:1:p:61-76

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