Network effects in credit market access: Evidence from Istanbul

Didem Tüzemen, Fikret Adaman and Oya Ardic
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Didem Tüzemen: Federal Reserve Bank of Kansas City

Iktisat Isletme ve Finans, 2013, vol. 28, issue 328, 09-32

Abstract: Many households in developing countries often have difficulty in smoothing consumption through formal credit channels. In turn, many rely on social (informal) networks. While this topic has been explored extensively in the literature on rural areas, the urban scene remains largely uninvestigated. This paper analyzes data from an exclusively-designed survey implemented in Istanbul, Turkey, and shows that households utilize both money transfers from social (informal) networks, and credit from formal institutions when they are experiencing cash shortages. Additionally, it is observed that some households utilize their social networks to facilitate easy and/or favorable access to formal credit, which has inevitable consequences for the overall efficiency and equity of access to financial services.

Keywords: Social Networks; Credit Market Access; Turkey; Household Survey; Consumption Smoothing (search for similar items in EconPapers)
JEL-codes: C35 D12 Z10 (search for similar items in EconPapers)
Date: 2013
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