The Importance of Harmonious Monetary and Fiscal Policies: An Examination upon Credit Interest Rate in Turkey

Year 2019, , 88 - 102, 30.04.2019

Mustafa Tevfik Kartal

https://doi.org/10.38009/ekimad.521421

Abstract

High bank
interest rates have been one of the main problems in certain periods for
Turkey. When development trend of interest rates is examined, it is seen that interest
rates were high in the past, they decreased between 2002 and 2010, and they
have been increasing after the year 2011. In order to reach low bank interest
rates, monetary and fiscal policies are the main tools that can be used. Therefore,
usage of monetary and fiscal policies in a harmonious way has substantial importance.
Within this context, this study is prepared to evaluate the recent experience
of Turkey in terms of harmonious monetary and fiscal policies. In this context,
the period after 2010 is included and the period after 2016 is focused especially.
Hence, recent approaches and practices in Turkey in terms of the harmonious
policy are examined.

As a result of
the study, it is determined in the study that tight monetary policy and loose fiscal
policy are applied generally in Turkey. However, monetary and fiscal policies have
begun to be harmonious with the last quarter of 2018. In this context, credit interest
rate of banks has been decreasing with the last quarter of 2018 which was increasing
since 2017. This shows that harmonious policies are so important that low bank
interest rates cannot be reached without the practice of harmonious policies.
This is the most important point that should be stated. Therefore, if it is
desired to reach low credit interest rate of banks, it is highly recommended
that Turkey should always adopt harmonious monetary and fiscal policies.

Keywords

Banking, Interest Rate, Harmonious Monetary and Fiscal Policies, Turkey

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