Does Exchange Rate Volatility Affect the Bank Lending Channel?

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dc.authoridBurak Buyun / 0000-0003-2594-7287
dc.authorwosidBurak Buyun / LNL-6225-2024
dc.contributor.authorBuyun, Burak
dc.date.accessioned2025-05-30T12:12:07Z
dc.date.available2025-05-30T12:12:07Z
dc.date.issued14.10.2024
dc.departmentİstinye Üniversitesi, İktisadi, İdari ve Sosyal Bilimler Fakültesi, Ekonomi Bölümü
dc.description.abstractThe bank lending channel is one of the most debated channels of the transmission mechanism, especially in Turkey. According to many studies, exchange rate volatility is a good indicator of macroeconomic, financial and political instability. This study tests whether the bank lending channel is affected by exchange rate volatility in Turkey. Thus, we aim to obtain an important finding on why the bank lending channel works weakly in Turkey. To test this hypothesis, the Vector Auto Regression (VAR) model is used for the period January 2011- September 2023. Evidence from the impulse response function suggests that exchange rate volatility has a negative impact on loans, while variance decomposition results show that exchange rate volatility has a high power to explain the change in loans. Credit may not always respond to expansionary (contractionary) monetary policy in an increasing (decreasing) direction. In periods of high exchange rate volatility (political, financial, macroeconomic instability), banks may not increase lending even in a low interest rate environment. This is because when exchange rate volatility is high, banks avoid taking risks under uncertainty. Therefore, for the bank lending channel to work more effectively, macroeconomic, financial and political stability should be ensured in addition to monetary policy.
dc.identifier.citationBuyun, B. (2024). Does Exchange Rate Volatility Affect the Bank Lending Channel?. Journal of Economic Policy Researches, 11(1), 51-61.
dc.identifier.doi10.26650/JEPR1343548
dc.identifier.endpage61
dc.identifier.issn2148-3876
dc.identifier.issue1
dc.identifier.startpage51
dc.identifier.urihttps://www.webofscience.com/wos/woscc/full-record/WOS:001327178700004
dc.identifier.urihttps://hdl.handle.net/20.500.12713/7258
dc.identifier.volume11
dc.identifier.wosWOS:001327178700004
dc.indekslendigikaynakWeb of Science
dc.institutionauthorBuyun, Burak
dc.institutionauthoridBurak Buyun / 0000-0003-2594-7287
dc.language.isoen
dc.relation.ispartofJournal Of Economıc Polıcy Researches-Iktısat Polıtıkası Arastırmaları Dergısı
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanı
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectexchange rate volatilitybank lending channelmonetary transmission channelfinancial stabilityvar model
dc.titleDoes Exchange Rate Volatility Affect the Bank Lending Channel?
dc.typeArticle

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