An Empirical Analysis of the Bank Lending Channel in Turkey

Özşuca, Ekin Ayşe; Akbostancı, Elif

doi:10.3848/iif.2013.328.3749

Cited by 5 publications

(5 citation statements)

References 16 publications

(15 reference statements)

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“…Most of the studies on advanced economies have found the importance of the credit channel (Garretsen & Swank, 1998 Leroy, 2014). However, there is some evidence that suggests the partial presence or absence of the credit channel (Ramey, 1993;Çavuşoğlu, 2002;Garretsen & Swank, 2003;Suzuki, 2004;Ozsuca & Akbostanci, 2012). The evidence on emerging market economies (EMEs) is inconclusive about the effectiveness of the credit channel.…”

Section: Literature Reviewmentioning

confidence: 99%

Credit channel of monetary policy transmission: Evidence from India

Mohanti,

Banerjee

2024

Investment Management and Financial Innovations

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The present study explores the effectiveness of the credit channel of monetary policy transmission in India from the perspective of magnitude, timing, and composition puzzles. To validate, further investigation of the effectiveness of the balance sheet channel and bank lending channel using the corporate cash flows and interest rate spreads, respectively, has been done. The study employs the structural vector autoregression model using the long-time quarterly series sample period from June 1998 to June 2022. The findings show that the anomalies concerning magnitude, timing, and composition effect do not exhibit a strong presence in the Indian context. The analysis of the weighted average call money rate and coverage ratio suggests a weak presence of the balance sheet channel in India with a weak negative correlation of 0.2943 (p &lt; 0.05). The overall behavior of spread analysis also shows a weak presence of the bank lending channel in India. Although some presence of the bank lending channel is seen on banks’ managed liability side, the effect of external finance premium is not reflected in the lending rates with a correlation of 0.0577 (p &gt; 0.05) between prime lending rate spread and weighted average call money rate spread. From the evidence, the study concludes the weak presence of the credit channel in India. Therefore, the monetary authorities might have to rely on other channels or may devise other unconventional mechanisms like Operation Twist and Long-Term Repo Operations observed during the COVID-19 pandemic to steer the real economy.

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Section: Literature Reviewmentioning

confidence: 99%

Credit channel of monetary policy transmission: Evidence from India

Mohanti,

Banerjee

2024

Investment Management and Financial Innovations

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“…The results display the limited impact of monetary shocks on loan supply, especially in the post-inflation targeting era. Özşuca and Akbostancı (2013) investigated the effect of monetary policy on credit growth between 1988 and 2009. The empirical analysis builds on cross-sectional heterogeneity in banks' lending supply responses using the size and CAMEL-type variables to appeal to a bank's financial health.…”

Section: Literature Reviewmentioning

confidence: 99%

“…On the other hand, significant coefficients emerge for only earnings capability and asset quality in banks' response to monetary policy changes for the period before the 2001 crisis. Notably, our study is methodologically in the spirit of Özşuca and Akbostancı (2013).…”

Section: Literature Reviewmentioning

confidence: 99%

Revisiting the bank lending channel in Turkey under the unconventional monetary policy framework

Özşuca

2022

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This paper provides empirical evidence regarding the bank lending channel under Turkey's unconventional monetary policy framework. Towards this end, the impact of changes in monetary policy stance on bank credit growth is investigated using a dynamic panel data modelling approach between 2011 and 2019. The empirical results reveal cross-sectional heterogeneity in the loan supply of Turkish banks following a change in monetary policy, which implies an operative bank lending channel in the post-2010 period of the policy mix. Small, liquidity-constrained, and inadequately capitalized banks tend to experience sharper contractions in their lending during monetary policy tightening episodes. Besides, in terms of bank-specific characteristics, the findings demonstrate that larger bank size and capital is associated with a higher loan supply. On the contrary, liquidity is found to harm bank lending.

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“…In addition, the effects of the monetary tightening are more negative for smaller, less liquid and less capitalized banks. Ozsuca and Akbostanci (2012) found the existence of the bank lending channel in the case of Turkey with the significant distributional effects due to the bank specific characteristics in the impact of monetary policy on the supply of bank loans. Size and capitalization of the banks are found to be important determinant of the loan supply in Estonia (Juks, 2004), Jamica (Urquhart, 2006) and Jordan (Boughrara and Ghazouni, 2010).…”

Section: Literature Reviewmentioning

confidence: 99%

The Bank Lending Channel of Monetary Policy in Nepal: Evidence from Bank Level Data

Budha¹

2013

NRB Econ. Rev.

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This paper examines the bank lending channel of monetary policy transmission in Nepal using data during 2003-2012. Using the dynamic Arellano-Bond GMM estimation with annual data of 25 Nepalese commercial banks, this study tries to estimate the loan supply responses of Nepalese commercial banks, depending on their balance sheet characteristics. The main results suggest that banks play a role in Nepal's monetary transmission mechanism. Empirical result shows that the bank lending decreases after a monetary tightening. Bank size is found to have significant impact on loan supply in Nepal. Similarly, liquidity in the case of private sector banks is also playing a significant role in bank lending in response to monetary policy changes. But, capitalization is found to have no significant impact on bank lending. The bank loan supply is also found to be significantly affected by gross domestic product.

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An Empirical Analysis of the Bank Lending Channel in Turkey

Cited by 5 publications

References 16 publications

Credit channel of monetary policy transmission: Evidence from India

Credit channel of monetary policy transmission: Evidence from India

Revisiting the bank lending channel in Turkey under the unconventional monetary policy framework

The Bank Lending Channel of Monetary Policy in Nepal: Evidence from Bank Level Data

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