The effect of monetary policies on the individual credits of banks

Monetary policy decisions' impact on real economic factors and price stability are materialized through various channels which are called monetary transmission mechanisms. It is significant to identify through which channels / to what extend / how long and late the monetary policies are effective. Measuring the impact of the policies that monetary policy follows to reach the final goals through the quantitive methods support decision making process of policymakers. After 80s, asymmetric information and development of theoric approaches based on other market defects have increased the importance of lending channel in transferring the monetary policies to real economy. The depth of banking sector in Turkey and the importance of mediation function require an investigation on the transfer through bank lending channel. With this objective, the impact of monetary policy on individual loan supply has been analyzed using ARDL bound test and VAR methodology including 2003:01-2013:10 term. Based on the results of the analysis, it has been concluded that loan supply of public, private and foreign capital deposit banks have been affected negatively in long term by lending interest rates that are means of credit supply, whereas, such an interaction is statistically insignificant for participation banks. As it is considered by the monetary policymakers, it has been concluded that transferring through individual credit channel is an applicable political argument. Key Words: Individual Credit, Monetary Transmission Mechanism, Bank Lending Channel, ARDL, VAR.