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Bank Lending in Turkey : Effects of Monetary and Fiscal Policies

Author/Editor: Burcu Aydin | Deniz Igan
Electronic Access: Free Full Text (PDF file size is 1,022KB)
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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: The period following the 2000-01 crisis was marked by a successful disinflation program sustained through inflation targeting and fiscal discipline in Turkey. This paper studies the impact of monetary and fiscal policies on credit growth during this period. Using quarterly bank-level data covering 2002-08, we find evidence that liquidity-constrained banks have sharper decline in lending during contractionary monetary policies and that crowding-out effect disappears more for banks with a retail-banking focus when fiscal policies are prudent.The results are statistically weak, suggesting that bank lending channel is not strong in Turkey and government finances has limited direct impact on credit.
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Series: Working Paper No. 10/233
Subject(s): Bank credit | Banking crisis | Banking sector | Credit expansion | Monetary transmission mechanism
Author's keyword(s): Bank credit | monetary policy | fiscal policy | panel data.
    Published:   October 1, 2010        
    ISBN/ISSN:   9781455209330/1018-5941   Format:   Paper
    Stock No:   WPIEA2010233   Pages:   33
    Price:   US$18.00        
    Published:   February 1, 2011        
            Format:   A web quality merged PDF
    Stock No:   WPIT2010233   Pages:   31
    Price:   US$18.00        
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