The relationship of SME loans with inflation and employment

In our country, particularly in the post-pandemic period, inflation has become a chronic issue, and concerns regarding employment have also arisen. Loans provided to SMEs, which constitute almost all domestic enterprises, increased significantly during this period. In this context, it is important to reveal the relationship between the loans granted to SMEs by banks and the levels of inflation and employment. This study examines the causality relationship between SME loans and inflation and the causality between SME loans and employment for the period 2011-2024 using a symmetric causality analysis. The analyses are also replicated for loans provided to micro, small, and medium-sized enterprises. The results indicate evidence of causality from SME loans to inflation, whereas no causality is observed from inflation or employment to loans, nor from loans to employment.