Interest Rate Corridor: A New Macroprudential Tool?
Hakan Kara (),
Pınar Özbay Özlü () and
CBT Research Notes in Economics from Research and Monetary Policy Department, Central Bank of the Republic of Turkey
The procyclical behavior of credit supply amplifies the business cycles. One of the aims of the traditional macro-prudential policies is to smooth the business cycle fluctuations by mitigating the excessive volatility in the risk appetite of financial intermediaries. This study shows that asymmetric interest rate corridor, a new policy instrument designed by CBRT, can be used for such a purpose. In this respect, this study focuses on the interaction of the interest rate corridor with the credit-deposit spread which is an important indicator of banks’ appetite for lending and hence credit supply. Our findings suggest that through the use of an asymmetric corridor policy together with an active liquidity management strategy, monetary policy is able to affect credit and deposit rates via different channels. Therefore, the interest rate corridor can be used to adjust the credit spread, and hence has the potential to be used as a macro-prudential policy tool.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16) Track citations by RSS feed
Downloads: (external link)
http://www.tcmb.gov.tr/wps/wcm/connect/6b0fff50-52 ... b1fe6a195554-m3fw5gO (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:tcb:econot:1320
Access Statistics for this paper
More papers in CBT Research Notes in Economics from Research and Monetary Policy Department, Central Bank of the Republic of Turkey Contact information at EDIRC.
Bibliographic data for series maintained by ().