Abstract:

Economic activity and interest rates as the determinants of private sector business loans are selected in the this article. Bank loans are affected by economic conditions affecting consumption and investment demand. The interest rates are significantly affect the business of financing costs. In addition, the firms' expectations for the future are expected to affect the volume of bank loans. In this context, in this study examines the relationships between the private sector business loan amount, loan interest rates, industrial production index and the real sector confidence index using montly data for the 2003: 1-2012: 12 period. A regression model is established for this purpose. First, the series of unit root tests are conducted and then examined the correlation and causality between variables. It is concluded that private sector business loans are sensitive to the variations in the interest rates and economic activity in the regression model. On the contrary, real sector confidence index is not to have a statistically significant effect in explaining the variation in private sector business loans.

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