Empirical analysis of financial dollarization in banking and real sector: In case of Turkey

In recent years, increasing in dollarization ratio is observed in Turkish economy. The aim of this study is to examine the degree of dollarization, determinants of dollarization and sectoral effects of financial dollarization in terms of the Turkish banking sector and the real sector. In accordance with this purpose; in banking sector analyzes, the determinants of loan and deposit dollarizations, which are considered to be financial dollarization factors, have been determined using the "Structural Vector Autoregressive Model" and 2004:1-2019:7 period data, and the effects of these factors on foreign currency loan volume have been examined. In the real sector analysis, the determinants of the debt dollarization ratio were investigated by using the "Least Squares Method with Deviation Corrected Shadow Variables" which is dynamic panel data methods and the data for the period 2008-2016 and then the effect of the debt dollarization ratio effect on sectoral profitability was examined. The results of the index calculation show that the degree of financial dollarization in the banking sector is experienced medium in the period of 2005-2013, and high in other periods; real sector dollarization degree is medium in all periods. The empirical findings show that the banking sector's foreign currency loan volume responded positively to a standard deviation shock in loan and deposit dollarization ratios and the debt dollarization rate increased the real sector profitability.