The impact of monetary policies on bank lending channel

Abstract

Tight monetary policies conducted in economy according to the theory of credit channel affect monetary transmission mechanism through their direct impact on banks. Depending upon this, we aimed to investigate whether bank lending channel was operative during 1998Q1-2001Q4 in Turkey. In view of the results obtained, we determined that monetary policies conducted during the above-mentioned period were of weak effect on bank lending. Another finding obtained from that period is that this impact varies according to liquidity positions of banks. We conclude that the bank lending channel was weakly operative in Turkey during this period.