The dynamic analysis of the effect the real interest rate, reserve money and domestic debt on the deposit banks balance sheets

In this study, it is investigated that how the response of the bank balance sheet to macroeconomic variables includes real interest rate, reserve money and the stocks of domestic debt are. The study starts with the framework of credit approach as a monetary transmission mechanism.The method of the Dynamic Time Series Analysis is used for investigating dynamic relationship between variables reflecting policy options of the monetary authority and reflecting the development of public sector borrowing and balance sheet items aggregated from deposit banks. It is determined that the effect of the macroeconomic variables on the banks balance sheet was reduced after the February 2001 crisis on the Turkish economy. In this context the response of the balance sheet aggregates to monetary aggregates and public sector borrowing was changed after 2002. In terms of the efficiency of credit channel approach, it can be said that effectiveness of credit approach was declined after the year of 2000-2001crisis years.