The effects of reserve requirements on financial stability in Turkey and Post-Keynesian view

As a traditional monetary policy instrument, reserve requirement ratio is basic and important variable formulating deposit multiplier for Classical Economy Theory lessons. However it has just an important role in the theory, central banks generally don't change the ratio frequently. Central banks attached more importance to financial stability objective after the 2008 global financial crisis and reserve requirement ratio came out in this context as a macroprudential instrument. Central Bank of the Republic of Türkiye started to use reserve requirements along with nominal interest rates actively in especially 2011 and afterwards. It is expectable in the traditional usage of reserve requirements that changes in required reserves affect real credit volume inversely, however it is observed that an increase in the reserve requirements doesn't make a decrease in the real credit volume. This observation accommodates with the views of Post – Keynesians about endogenous money supply and the idea credit supply is determined by credit borrowers.