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MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA

Year 2011, Volume: 3 Issue: 2, 23 - 33, 01.12.2011

Abstract

Monetary transmission mechanism, which is used by central banks to affect consumption, investment and saving decisions of both households and firms, has been subject of many theoretical and empirical studies. It seems that there is a consensus that monetary policy affects real economy in the short run. But on the other hand, the question “how it actually does” has been discussed by many economists for several years. The reason for this is that the countries which are at different stages of development also have financial systems at different levels. While in industrialized countries, the capital market system is more effective in the financial system; in developing countries, banking system is dominant in the financial system. From this viewpoint, this study tries to answer the question “which of the two channels of transmission mechanisms is effective in the two developing countries, Argentina and Turkey, “money channel or credit channel (which is not alternative but complementary for money channel)”. VAR model is used to identify relative strengths of different monetary transmission channels in each country by five macroeconomic variables which are stated in the following order: overnight rate, bank deposits, bank loans, consumer price index and industrial production index. The data period of these variables ranges from 2003:01 to 2010:08. The paper proceeds as follows: Section I provides theoretical background of the money and credit channels of transmission mechanism. Section II summarizes recent empirical studies. Section III describes variables and discusses the empirical findings of the model. Section IV provides concluding remarks

References

  • Ando, Albert and Franco Modiagliani (1963), “The Life Cycle Hypothesis of
  • Saving: Aggregate Implications and Tests”, American Economic Review, Vol. 53, No. 1, pp. 55-84. Bernanke, Ben and Alan S. Blinder (1988), “Credit Money and Aggregate
  • Demand”, The American Economic Review, Vol. 78, No. 2, pp. 435–439. Bernanke, Ben S. (1993), “Credit in the Macroeconomy”, Federal Reserve Bank of New York Quarterly Review, Vol. 18, Issue 1, pp. 50-70.
  • Bernanke, Ben S. and Mark Gertler (1995), “Inside the Black Box: The Credit
  • Channel of Monetary Policy Transmission”, The Journal of Economic Perspectives, Vol. 9, No. 4, pp. 27-48. Cambazoğlu, Birgül (2010), Parasal Aktarım Mekanizması Kredi Kanalı: Kuram ve Türkiye Örneği, Unpublished Doctoral Dissertation, Adnan Menderes
  • University Institute of Social Sciences, Aydın, Turkey. Çavuşoğlu, Tarkan (2002), “Credit Transmission Mechanism in Turkey: An
  • Emprical Investigation”, Middle East Technical University ERC Working Papers in Economics, Vol.02/03, pp. 1-30. Cengiz, Vedat and Mehmet Duman (2008), “Türkiye’de Banka Kredi Kanalının
  • Önemi Üzerine Etki Tepki Fonksiyonlarına Dayalı Bir Değerlendirme (1990- )”, Hacettepe Üniversitesi İ.İ.B.F Dergisi, Vol. 26, No. 2, pp. 81-104.
  • Çiçek, Macide (2005), “Türkiye’de Parasal Aktarım Mekanizması: VAR (vektör Otoregresyon) Yaklaşımıyla Analizi”, İktisat İşletme ve Finans Dergisi, Vol. 20, No. 233, pp. 82-105.
  • Fuinhas, J.Alberto (2008), "Monetary Transmission and Bank Lending in
  • Portugal: A Sectoral Approach”, The IUP Journal of Monetary Economics, Vol. VI, Iss. 1, pp. 34-60. Gertler, Mark and Simon Gilchrist (1994), “Monetary Policy, Business Cycles, and the Behaviour of Small Manufacturing Firms”, The Quarterly Journal of
  • Economics, Vol. 109, No. 2, pp. 309-340. Gomez-Gonzales, J. and F. Grosz (2007), “Evidence of Bank Lending Channel for Argentina and Colombia”, Cuadernos de Economia, Vol.44, pp. 109-126.
  • Gündüz, Lokman (2001), "Türkiye’de Parasal Aktarım Mekanizması ve Banka
  • Kredi Kanalı”, İMKB Journal, Iss. 5, Vol. 18, pp. 13-30. Hubbard, Glenn. R (1994), “Is There a Credit Channel for Monetary
  • Policy?”,NBER Working Paper, pp. 1-45  http://ww2.publicbank.com.my/cnt_review37.html (download: 9/12/2002).
  • İnan, Emre Alpan (2001), “Parasal Aktarım Mekanizmasının Kredi Kanalı ve Türkiye”, Bankacılar Dergisi, No. 39, pp. 3-19.
  • Mishkin, S. Frederic. (1995) “Symposium on the Monetary Transmission
  • Mechanism”, The Journal of Economic Perspectives, Vol.9 No.4, pp. 3-10. Özdoğan, Z. (2009) Monetary Transmission Mechanism in Turkey, Unpublished
  • Doctoral Dissertation, University of Delaware, Newark USA. OECD, Türkiye’deki Küçük ve Orta Ölçekli İşletmeler Mevcut Durum ve Politikalar, ). Şengönül, Ahmet and Willem Thorbecke (2005), “The Effect of Monetary Policy on Bank Lending in Turkey”, Applied Financial Economics, Vol. 15, Iss. 13, pp. 934.
  • Suzuki, Tomoya (2004), “Is the Lending Channel of Monetary Policy Dominant in Australia?”, The Economic Record, Vol. 80, Iss. 249, pp. 145-156.
  • Taylor, B. J. (1995), “Monetary Transmission Mechanism: An Empirical
  • Framework”, Journal of Economic Perspective, 9(4), pp. 11-26. Tobin, James (1969) “A General Equilibrium Approach to Monetary Theory”,
  • Journal of Money, Credit and Banking, Vol. 1, No. 1, pp. 15-29.
Year 2011, Volume: 3 Issue: 2, 23 - 33, 01.12.2011

Abstract

References

  • Ando, Albert and Franco Modiagliani (1963), “The Life Cycle Hypothesis of
  • Saving: Aggregate Implications and Tests”, American Economic Review, Vol. 53, No. 1, pp. 55-84. Bernanke, Ben and Alan S. Blinder (1988), “Credit Money and Aggregate
  • Demand”, The American Economic Review, Vol. 78, No. 2, pp. 435–439. Bernanke, Ben S. (1993), “Credit in the Macroeconomy”, Federal Reserve Bank of New York Quarterly Review, Vol. 18, Issue 1, pp. 50-70.
  • Bernanke, Ben S. and Mark Gertler (1995), “Inside the Black Box: The Credit
  • Channel of Monetary Policy Transmission”, The Journal of Economic Perspectives, Vol. 9, No. 4, pp. 27-48. Cambazoğlu, Birgül (2010), Parasal Aktarım Mekanizması Kredi Kanalı: Kuram ve Türkiye Örneği, Unpublished Doctoral Dissertation, Adnan Menderes
  • University Institute of Social Sciences, Aydın, Turkey. Çavuşoğlu, Tarkan (2002), “Credit Transmission Mechanism in Turkey: An
  • Emprical Investigation”, Middle East Technical University ERC Working Papers in Economics, Vol.02/03, pp. 1-30. Cengiz, Vedat and Mehmet Duman (2008), “Türkiye’de Banka Kredi Kanalının
  • Önemi Üzerine Etki Tepki Fonksiyonlarına Dayalı Bir Değerlendirme (1990- )”, Hacettepe Üniversitesi İ.İ.B.F Dergisi, Vol. 26, No. 2, pp. 81-104.
  • Çiçek, Macide (2005), “Türkiye’de Parasal Aktarım Mekanizması: VAR (vektör Otoregresyon) Yaklaşımıyla Analizi”, İktisat İşletme ve Finans Dergisi, Vol. 20, No. 233, pp. 82-105.
  • Fuinhas, J.Alberto (2008), "Monetary Transmission and Bank Lending in
  • Portugal: A Sectoral Approach”, The IUP Journal of Monetary Economics, Vol. VI, Iss. 1, pp. 34-60. Gertler, Mark and Simon Gilchrist (1994), “Monetary Policy, Business Cycles, and the Behaviour of Small Manufacturing Firms”, The Quarterly Journal of
  • Economics, Vol. 109, No. 2, pp. 309-340. Gomez-Gonzales, J. and F. Grosz (2007), “Evidence of Bank Lending Channel for Argentina and Colombia”, Cuadernos de Economia, Vol.44, pp. 109-126.
  • Gündüz, Lokman (2001), "Türkiye’de Parasal Aktarım Mekanizması ve Banka
  • Kredi Kanalı”, İMKB Journal, Iss. 5, Vol. 18, pp. 13-30. Hubbard, Glenn. R (1994), “Is There a Credit Channel for Monetary
  • Policy?”,NBER Working Paper, pp. 1-45  http://ww2.publicbank.com.my/cnt_review37.html (download: 9/12/2002).
  • İnan, Emre Alpan (2001), “Parasal Aktarım Mekanizmasının Kredi Kanalı ve Türkiye”, Bankacılar Dergisi, No. 39, pp. 3-19.
  • Mishkin, S. Frederic. (1995) “Symposium on the Monetary Transmission
  • Mechanism”, The Journal of Economic Perspectives, Vol.9 No.4, pp. 3-10. Özdoğan, Z. (2009) Monetary Transmission Mechanism in Turkey, Unpublished
  • Doctoral Dissertation, University of Delaware, Newark USA. OECD, Türkiye’deki Küçük ve Orta Ölçekli İşletmeler Mevcut Durum ve Politikalar, ). Şengönül, Ahmet and Willem Thorbecke (2005), “The Effect of Monetary Policy on Bank Lending in Turkey”, Applied Financial Economics, Vol. 15, Iss. 13, pp. 934.
  • Suzuki, Tomoya (2004), “Is the Lending Channel of Monetary Policy Dominant in Australia?”, The Economic Record, Vol. 80, Iss. 249, pp. 145-156.
  • Taylor, B. J. (1995), “Monetary Transmission Mechanism: An Empirical
  • Framework”, Journal of Economic Perspective, 9(4), pp. 11-26. Tobin, James (1969) “A General Equilibrium Approach to Monetary Theory”,
  • Journal of Money, Credit and Banking, Vol. 1, No. 1, pp. 15-29.
There are 23 citations in total.

Details

Other ID JA56PG89HM
Journal Section Articles
Authors

Birgul Cambazoğlu This is me

Sevcan Güneş This is me

Publication Date December 1, 2011
Published in Issue Year 2011 Volume: 3 Issue: 2

Cite

APA Cambazoğlu, B., & Güneş, S. (2011). MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA. International Journal of Economics and Finance Studies, 3(2), 23-33.
AMA Cambazoğlu B, Güneş S. MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA. IJEFS. December 2011;3(2):23-33.
Chicago Cambazoğlu, Birgul, and Sevcan Güneş. “MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA”. International Journal of Economics and Finance Studies 3, no. 2 (December 2011): 23-33.
EndNote Cambazoğlu B, Güneş S (December 1, 2011) MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA. International Journal of Economics and Finance Studies 3 2 23–33.
IEEE B. Cambazoğlu and S. Güneş, “MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA”, IJEFS, vol. 3, no. 2, pp. 23–33, 2011.
ISNAD Cambazoğlu, Birgul - Güneş, Sevcan. “MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA”. International Journal of Economics and Finance Studies 3/2 (December 2011), 23-33.
JAMA Cambazoğlu B, Güneş S. MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA. IJEFS. 2011;3:23–33.
MLA Cambazoğlu, Birgul and Sevcan Güneş. “MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA”. International Journal of Economics and Finance Studies, vol. 3, no. 2, 2011, pp. 23-33.
Vancouver Cambazoğlu B, Güneş S. MONETARY TRANSMISSION MECHANISM IN TURKEY AND ARGENTINA. IJEFS. 2011;3(2):23-3.