Increase in consumer credits and risk analysis: The case of Turkey

In today's world, because the consumption is being shaped by "Get Into Debt To Have" model, consumer credits have become an essential part of an individual's life. The fact that we can reach information anywhere in the world thanks to those little technologies we carry in our pockets has also enabled fund flows to accelerate and made it possible for people who need funds to reach out to those who have extra funds at any moment. While the existence of consumer credits have increased the consumption possibilities, it also has risks that may affect the creditor institution. Thus, identifying the risks the credits have, studying them, managing them accurately, and equalizing them will be important for the creditor institution. This study has analyzed the supply and demand aspects of consumer credits and examined the risks of consumer credits. With the the increasing consumer loans in Turkey, the interaction between non-performing loans and macro variables have been examined. The purpose of the study is to identify the factors that affects nonperforming credits in Turkey, between quarter periods 2003(1)-2017(3), through empirical examination. Interaction between nonperforming credits and variables like GDP, inflation rate, exchange rate, interest rate, unemployment rate, money supply have been examined. With the analysis, it is observed that nonperforming loans have some interaction with all of these variables, and the pattern of behavior in case of shocks have been determined.