Monetary policy stance and foreign currency lending: evidence from a persistently dollarized emerging market

Önder Özgür () and Murat Aslan ()
Additional contact information
Murat Aslan: Ankara Yıldırım Beyazıt University

Economic Change and Restructuring, 2025, vol. 58, issue 4, No 4, 34 pages

Abstract: Abstract This study explores how central bank policy changes influence Turkish banks’ foreign currency lending in one of the most dollarized emerging markets. Using quarterly data from 2002Q4 to 2024Q3 and applying a Bayesian Additive Regression Trees model within a machine learning framework, we uncover that higher policy rates amplify foreign currency lending—especially among larger banks—thereby weakening monetary transmission. The analysis also highlights the nonlinear and asymmetric effects of deposit dollarization, bank size, and macroeconomic conditions. These findings offer new insights into the structural constraints of monetary policy under persistent dollarization, with direct implications for policy design in similar economies.

Keywords: Machine learning; Dollarization; Türkiye; Monetary policy; Policy rate; Foreign currency lending (search for similar items in EconPapers)
JEL-codes: E5 F31 G21 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10644-025-09895-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:ecopln:v:58:y:2025:i:4:d:10.1007_s10644-025-09895-y

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1007/s10644-025-09895-y

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().