The effects of changes in household indebtedness ratio on current account deficit in Turkey

The most important source of financing for households to overcome the income gap caused by consuming more than their income is consumer loans created by banks. Increases in the amount of consumer loans increase the total demand for goods and services in the economy. This situation affects the gross domestic product and the current account balance (current account deficit). Credit volume, which is one of the main determinants of the current account deficit, affects the current account deficit negatively. Especially in the economy, the increases in the credit volume during both crisis periods and expansion periods cause this negative effect to increase. In recent years become unsustainable current deficit, Turkey's most important macroeconomic issues continue to be. In this study, the relationship between the consumer bank in Turkey in consideration of the consumer loans current account deficit, 2004:Q4-2020:Q1 period was analyzed by boundary-testing approach and the ARDL model using quarterly data. According to the limit test results, it has shown that there is a cointegration relationship between the current account deficit and total consumer loans and consumer loans, housing loans, vehicle loans and individual credit cards, which are the subcomponents of this loan. According to the results of the ARDL model, it has been determined that housing loans and total consumer loans, other than vehicle loans, have a negative and statistically significant effect on the current account deficit in the long run. It was concluded that consumer loans and individual credit cards had a positive and statistically significant effect on the current account deficit in the long run.