The effect of credit cards on the inflation in Turkey

iiiABSTRACTIf we compare the lives of the people of the past and the present, we can saythat the modern man is lucky. Developments in the fields of technology,communication and medicine are good examples for this. Credit cards also providecomfort and make the daily life easier.Inflation is an undesired but common situation. Inflation in the developedcountries can be seen at low rates but occasionally it has drastic rates in somecountries. If we do not consider the last three years in Turkey, we have lived for along time with three-digit inflation rates.In the first part, some information about credit cards is given. Development ofthe credit cards and their impact on the financial renewal process has been analyzed.In the second part, development of the credit cards in Turkey has beenstudied. In addition, credit card systems, usage of credit card for both parties andlegal basis for credit cards have been evaluated.The third part is devoted to the impact of the consumption expenditures withcredit cards on inflation. First, the causality between the consumption expenditureswith credit cards and inflation is investigated. Granger Causality test is utilized toanalyze the direction of the causality relationship between the consumptionexpenditures with credit cards and inflation. It is concluded that the consumptionwith credit cards affects inflation rates. Second, the relationship between inflationand the consumption expenditures with credit cards is analyzed using an errorcorrection model. The findings from this analysis show that there exist a significantrelationship between inflation and the consumption expenditures with credit cards.