Monetary policy and banking sector : lessons from Turkey

Article English OPEN
Akinci, Dervis Ahmet ; Matousek, Roman ; Radić, Nemanja ; Stewart, Chris (2012)
  • Publisher: Centre for EMEA Banking, Finance and Economics, London Metropolitan University
  • Subject: dewey330

We find evidence that monetary policy influenced bank lending in Turkey in the period 1991 - 2007 both directly through the money lending channel and indirectly through the bank lending channel. The bank lending channel is shown to depend on two bank characteristics, namely liquidity and capital. We also find that both capital and GDP growth have plausible positive and significant long-run effects on bank loan growth, whereas inflation, bank size and, in particular, efficiency do not have a significant equilibrium relationship with loan growth. This latter result is despite our finding that the efficiency of all Turkish banks improved over the period. It is also evident that domestic banks are, unexpectedly, found to be more efficient, on average, than foreign banks. We discovered no evidence of significant dynamics or fixed-effects in the growth of loans and so prefer to use the pooled OLS estimator over the fixed-effects and Arellano and Bond estimators. We therefore caution against assuming the existence of fixed-effects and dynamics in such models as this may adversely affect inference.
  • References (12)
    12 references, page 1 of 2

    Akcay, C., Erzan, R. and Yolalan, R. 2001. An Overview of the Turkish Banking Sector, Bogazici Journal: Review of Social, Economic and Administrative Studies, 15, 13-23.

    Akram, Farooq Q.; Bårdsen, Gunnar, Lindquist, Kjersti-Gro, 2007. Pursuing financial stability under an inflation-targeting regime. Annals of Finance, 3, 131-153

    Akyuz, Y. 1990. Financial System and Politics in Turkey in the 1980s in The Political Economy of Turkey (Eds) T. Aricanli and D. Rodrik, The Macmillan Press, London, 98-131.

    Allsopp, Christopher, Kierzkowski, Henryk, 1997. The assessment: Economics of transition in Eastern and Central Europe. Oxford Review of Economic Policy, 13, 1-22.

    Altunbas, Y., Chakravarty, S.P., 2001. Frontier cost functions and bank efficiency. Economics Letters, 72, 233- 240.

    Altunbas, Y., Liu, M.H., Molyneux, P., Seth, R., 2000. Efficiency and risk in Japanese banking. Journal of Banking and Finance, 24, 1605-1628.

    Altunbas, Y., Fazylov, O., Molyneux, P., 2002. Evidence on the bank lending channel in Europe. Journal of Banking & Finance, 26, 2093-2110.

    Staikouras,C., Mamatzakis, E., Koutsomanoli-Filippaki, A. 2008. Cost efficiency of the banking industry in the South Eastern European region, Journal of International Financial Markets, Institutions and Money, 18, 483-497.

    Steinherr, A., Tukel, A., and Ucer, M., 2004. The Turkish Banking Sector: Challenges and Outlook in Transition to EU Membership. CEPS EU-Turkey Working Papers No. 4, 1 August 2004

    Stewart C., 2006. Spurious Correlation of I(0) Regressors in Models with an I(1) Dependent Variable, Economics Letters, 91, 184 - 189.

  • Metrics
    views in OpenAIRE
    views in local repository
    downloads in local repository

    The information is available from the following content providers:

    From Number Of Views Number Of Downloads
    London Met Repository - IRUS-UK 0 36
Share - Bookmark