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The Impact of Monetary Policy on Credit Growth: Evidence from Firm Level Micro Data

Arif Oduncu and Fatih Altunok
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Arif Oduncu: Central Bank of the Republic of Turkey
Fatih Altunok: Central Bank of the Republic of Turkey

No 253, EY International Congress on Economics II (EYC2015), November 5-6, 2015, Ankara, Turkey from Ekonomik Yaklasim Association

Abstract: We make use of a unique data set that includes loan and bank relationship information at the firm level to investigate the role of monetary policy on the loan growth of firms. We analyze how Turkish firms adjust their credit growth in response to unexpected monetary policy shocks. We use unexpected shocks instead of interest-rate changes in order to solve the possible endogeneity problem between monetary policy and credit growth. We show that unexpected monetary tightening has a significant effect on the decline of firm credit growth. This effect is larger for credit-constrained firms. We find that unexpected shocks are effective only for short term loans but are not effective for medium and longterm loans. We also show the asymmetric impact of monetary policy on loan growth. Our results are robust to firm characteristics, credit demand and firm financial performance factors as well as the firm-bank relationship.

Keywords: NA (search for similar items in EconPapers)
JEL-codes: E52 G30 G32 (search for similar items in EconPapers)
Pages: 2 pages
Date: 2015
New Economics Papers: this item is included in nep-ara, nep-cba, nep-cfn and nep-mac
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