The real effects of monetary policy through the bank lendi̇ng channel and pass-through of monetary policy to loan rates:The case of Turkey

Monetary policy actions affect the real economic activity through monetary transmission mechanism channels. Banks play a special role in the financial system in the credit channel which enhances the effect of interest rate channel that is based on the standart IS-LM model. Monetary policy brings out the reel effects by changing credit supply of banks in the bank lending channel which is a branch of the credit channel. Investigating the effectiveness of the bank lending channel forms the first purpose of this study for the period 2002:01-2014:12 by using VAR method. For this purpose, it is confirmed that Turkey's economy is largely provided the efficiency requirements of the bank lending channel before making empirical analysis. The results of impulse-response functions indicate that the bank lending channel is efficient. In this study, the power of monetary policy is attempted to be determined in directing the credit supply and credit demand by investigating the effects of monetary policy on loan rates, the most determinants of the demand for credit, besides on the credit supply. Therefore, it is investigated that the pass-through effects from policy interest rate to cash, house, automobile and corporate loan rates for the same period by employing ARDL model and Kalman filter method. Empirical results suggest that cash loans have the highest pass-through adjustment and the dynamic effects of the policy rate on the loan rates generally decreases until 2008 and is more stable after the global financial crisis. In this study, it is concluded that the TCMB affects macroeconomic variables through the bank lending channel and has a significant effect on the loan rates and thus on the credit demand.