Demand and Competition Analysis in the Turkish Deposit and Credit Markets

Guzin Akin (), Ahmet Aysan, Sebnem Ileri and Levent Yildiran ()

Emerging Markets Finance and Trade, 2013, vol. 49, issue S5, 41-58

Abstract: By estimating discrete choice multinomial logit demand models, we unveil consumer preferences in the Turkish deposit and credit markets in the 2002-9 period. We find that consumers prefer banks with larger networks and more efficient technologies in both markets. Borrowers are very responsive to interest rates, but depositors are not. We conclude that monopolistic competition prevails in both markets. However, banks' market power in the credit market is much lower than in the deposit market. Moreover, the comparison of demand elasticities in these two markets shows that credits will respond more than deposits to the taxes imposed on them, suggesting that loan provisions can be more effective than reserve requirements as a macroprudential policy tool to restrict credit growth.

Keywords: discrete choice utility; elasticity; loan provisions; monopolistic competition; price competition; reserve requirements (search for similar items in EconPapers)
Date: 2013
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