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The bank lending channel in Turkey: has it changed after the low-inflation regime?

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  • Abdurrahman Nazif Çatik
  • Mehmet Karaçuka

Abstract

In this article we aim to analyse the role of credit channel in the monetary transmission mechanism under different inflationary environments in Turkey covering the period from January 1986 to October 2009. Our results suggest that traditional interest rate channel is only valid for the post-inflation targeting period. This variable is also a more effective monetary policy tool in terms of its impacts on economic activity in both the regimes. Credit shocks itself have significant power on economic activity and prices. However, the effect of monetary shocks on credit volume is very limited, especially in the low-inflation regime.

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  • Abdurrahman Nazif Çatik & Mehmet Karaçuka, 2012. "The bank lending channel in Turkey: has it changed after the low-inflation regime?," Applied Economics Letters, Taylor & Francis Journals, vol. 19(13), pages 1237-1242, September.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:13:p:1237-1242
    DOI: 10.1080/13504851.2011.619479
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