The Bank Lending Channel of Monetary Transmission: Does It Work in Turkey?

Author/Editor: Koeva Brooks, Petya
Publication Date: December 01, 2007
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: Does the bank lending channel of monetary transmission work in Turkey? Using the May- June 2006 financial turbulence as an exogenous shock that prompted a significant tightening of monetary policy, this paper examines the loan supply response of Turkey's banks, depending on their balance sheet characteristics. The empirical results indicate that banks can play a role in Turkey's monetary transmission mechanism. Specifically, bank liquidity is found to have a significant effect on loan supply in Turkey. This suggests that the effect of monetary policy in Turkey can be propagated by the banking sector, depending on its liquidity position.
Series: Working Paper No. 07/272
Subject(s): Liquidity | Turkey | Interest rates on loans

Author's Keyword(s): Bank lending | monetary transmission | liquidity
Publication Date: December 01, 2007
Format: Paper
Stock No: WPIEA2007272 Pages: 11
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