The effect of consumer loans on current accounts deficit the case of Turkey

Among the macroeconomic indicators, one of the most important structural problems is the current account deficit. One of the most important economic problems, especially after the 2008 crisis in Turkey is the current account deficit. In order to reduce the current account deficit, it is important for economic authorities and researchers to determine its causes and affecting channels. In this context, the types and structure of consumer loans, which are considered as one of the reasons of the current account deficit, are an important indicator to fight against the current account deficit. In line with the target of reducing the current account deficit, to determine whether a restriction on consumer loans can be used as a financial measure, the relationship between consumer loans and its subcategories- mortgage, personal finance and transport loans and current account deficit in Turkey was examined using the data of 1997-2018 period. The short and long term relationships between the series were estimated by ARDL boundary test and it was concluded that the error correction mechanism worked in the short term. In the long term, a positive and statistically significant relationship was found between the total consumer loans and personal finance and transport loans from consumer loans and the current account deficit. In this respect, it can be stated that consumer loans in general are an important factor affecting the current account deficit and which should be taken into consideration in policy making in Turkey. Moreover, I should be noted that the restrictions to be imposed on consumer loans in Turkey would be useful in reducing the current account deficit; however, it is more appropriate to evaluate the restrictions according to the types of consumer loans.