Credit transmission mechanism in Turkey: An empirical investigation

Tarkan Çavuşoğlu

No 203, ERC Working Papers from ERC - Economic Research Center, Middle East Technical University

Abstract: The purpose of the study is to empirically test the presence of a bank lending channel in the Turkish economy. The empirical investigations are focused on the bank lending behaviour of 58 deposit money banks in the Turkish banking system over the period 1988-1999. The estimation methodology of the empirical analysis differs from that of similar studies in the literature, providing econometrically more efficient model estimates through exploiting dynamic panel data modelling with Generalized Method of Moments estimations. The results of the model estimations provide no evidence of a potential for a bank lending channel to exist in the Turkish economy. Such an outcome is reflected in the lack of a significant relationship between the change in the monetary policy indicator and the growth rate of the loan supply in the estimated models. Categorizing the loan supply responses of banks with respect to bank size differences has not provided any significant improvement in revealing the evidence of a bank lending channel. The empirical results indicate that bank lending behaviour is influenced significantly by bank specific factors, such as the balance sheet strength and the quality of the asset portfolio, and by debt sales to the banking system.

Keywords: Credit channel; bank lending channel; dynamic panel data; Turkey (search for similar items in EconPapers)
JEL-codes: E42 E51 G21 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2002-03, Revised 2002-03
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:met:wpaper:0203

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