Forecasting the Effect of Credit Utilization Rate on Inflation Volatility in Turkey

Utku Altunöz
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Utku Altunöz: Sinop University

A chapter in Eurasian Business and Economics Perspectives, 2024, pp 209-230 from Springer

Abstract: Abstract The aim of this study is to analyze the effect of credit utilization on inflation volatility in the context of commercial and consumer loans in Turkey, which is an example for developing countries. In the study, the relations between these two variables are tested for the 2005–2020 period in Turkey, which has been struggling with the inflation problem for many years. In this context, the effects of consumer and commercial loans used in Turkey, as well as consumer price index (CPI) and producer price index (PPI) inflation rates on the volatility were examined by ARCH, GARCH, E-GARCH models. Consumer loan utilization rates it has been determined that inflation rates increase the volatility. In other words, it was concluded that the increase in the usage rate of consumer loans in Turkey in the mentioned period caused an inflationary effect on the consumer basis. Also, the utilization rate of commercial loans reduces the volatility of inflation rates. That means that the increase in the use of commercial loans increases the real money supply by decreasing the money demand in the economy.

Keywords: Inflations; Individual loans; Commercial loans; ARCH; GARCH; E-GARCH (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-64140-4_12

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DOI: 10.1007/978-3-031-64140-4_12

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