DETERMINANTS OF BANK LENDING IN TURKEY

2022-6-09
Deniz, Burak
As one of the most important elements of the financial system, bank loans significantly affect both the real economy and financial markets. As a result, it is crucial to analyze the determinants as well as the dynamics of bank loans through time. In this study, the determinants of total loans, corporate loans, and consumer loans in the banking sector of Turkey are examined for the period 2005Q1-2019Q4 via an Autoregressive Distributive Lag Model (ARDL). The volume of domestic currency deposits and foreign currency deposits in the banking sector, the exchange rate, real GDP, the consumer price index (CPI), and the policy rate are selected as the explanatory variables of the econometric models. Estimation results show that, as an indicator of the lending capacity of the banks, the loan volume is positively related to the deposit volume, economic growth encourages the loan growth, the depreciation of the domestic currency discourages the loan growth, and the overnight borrowing interest rate, as a proxy of the policy rate and inflation rate, showed no significant effect. Furthermore, the study demonstrates that the effects of the variables on credit growth differ depending on the term (short or long) and the type (consumer or corporate). This study contributes to the literature by analyzing bank loans in short and long terms for different loan types.

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Citation Formats
B. Deniz, “DETERMINANTS OF BANK LENDING IN TURKEY,” M.S. - Master of Science, Middle East Technical University, 2022.