An Empirical Analysis of the Risk-Taking Channel of Monetary Policy in Turkey |
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Authors: | Ekin Ayşe Özşuca Elif Akbostancı |
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Institution: | 1. Agena Economics and Financial Services Inc., Ankara, Turkey;2. Department of Economics, Middle East Technical University, Ankara, Turkey |
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Abstract: | This article investigates the bank-specific characteristics of risk-taking behavior of the Turkish banking sector as well as the existence of risk-taking channel of monetary policy in Turkey. Using bank-level quarterly data over the period 2002–2012 a dynamic panel model is estimated. We find evidence that low short-term interest rates reduce the risk of outstanding loans; however short-term interest rates below a theoretical benchmark increase risk-taking of banks. This result holds for macroeconomic controls and external factors as well. Furthermore, in terms of bank-specific characteristics, our analysis suggests that large, liquid, and well-capitalized banks are less prone to risk-taking. |
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Keywords: | monetary policy transmission mechanisms risk-taking channel Turkey panel data |
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