Regulating Check Use in Turkey

Semih Tumen

Central Bank Review, 2012, vol. 12, issue 1, 1-12

Abstract: This paper develops a simple model of the market for checks in Turkey. The Central Bank controls the lump-sum amount that the drawee banks are legally responsible to pay per bad check. An increase in this amount is believed to support real economy. I show that banks will tend to restrict the quantity of checks when this responsibility is increased. A percentage point increase in banks' obligation per bad check could lead up to a 1.7 percent decline in the total supply of checks on the margin. This means that a rise in this obligation may harm the real economy rather than providing support.

Keywords: Checks; Regulation; Monopoly; Heterogeneous preferences (search for similar items in EconPapers)
JEL-codes: D42 E42 G21 G28 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:cebare:v:12:y:2012:i:1:p:1-12

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