Liquidity Policies and Bank Lending
Koray Alper Timur Hulagu Gursu Keles Central Bank of Turkey Question
• Can monetary policies which directly manipulate liquidity positions of banks affect bank lending? – Empirical evidence from a Turkish bank level panel dataset Monetary Transmission
CB Money Channel
Intertemporal Prices, OMO Policy Rate Cost of Capital
Reserves REAL ECONOMY
Reservable Loanable Credit Liabilities Funds Supply
Bank Lending Channel
Bernanke and Blinder (1988) Literature
Reservable Loanable Credit Liabilities Funds Supply
• Size: Kashyap and Stein (1995) • Liquidity: Kashyap and Stein (2000), Gambacorta (2005) • Capitalization: Kishan and Opiela (2000) Literature
Policy OMO Rate
Reserves
No connection • Disyatat (2010) • Friedman and Kuttner (2010) Monetary Transmission
CB Money Channel
Policy OMO Intertemporal Prices, Rate Cost of Capital RR
Reserves REAL ECONOMY
Reservable Loanable Credit Liabilities Funds Supply
Bank Lending Channel Literature
• Ehrmann et al. (2001) for the Euro area • Matousek and Sarantis (2009) for central and eastern Europe • Takeda et al. (2005) for Brazil • Brooks (2007) for Turkey Literature
• Alper et al. (2011) provides survey evidence on liquidity and bank lending in Turkey. • Liquidity position is an important determinant of bank lending • Banks are reluctant to rely heavily on O/N CB funding • Resorting standing facilities is percieved costly in terms of reputation Methodology
• Following Bernanke and Blinder (1988), Ehrmann et al. (2001)