An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey

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Date

2016-03-01

Author

Ozsuca, Ekin Ayse
Akbostancı Özkazanç, Elif

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This article investigates the bank-specific characteristics of risk-taking behavior of the Turkish banking sector as well as the existence of risk-taking channel of monetary policy in Turkey. Using bank-level quarterly data over the period 2002-2012 a dynamic panel model is estimated. We find evidence that low short-term interest rates reduce the risk of outstanding loans; however short-term interest rates below a theoretical benchmark increase risk-taking of banks. This result holds for macroeconomic controls and external factors as well. Furthermore, in terms of bank-specific characteristics, our analysis suggests that large, liquid, and well-capitalized banks are less prone to risk-taking.

Subject Keywords

Panel data, Turkey, Risk-taking channel, Transmission mechanisms, Monetary policy

URI

https://hdl.handle.net/11511/41072

Journal

EMERGING MARKETS FINANCE AND TRADE

DOI

https://doi.org/10.1080/1540496x.2015.1047300

Collections

Department of Economics, Article

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Citation Formats

E. A. Ozsuca and E. Akbostancı Özkazanç, “An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey,” EMERGING MARKETS FINANCE AND TRADE, pp. 589–609, 2016, Accessed: 00, 2020. [Online]. Available: https://hdl.handle.net/11511/41072.