This paper analyzes empirically the validity of the bank lending channel in Turkey. Using data for the period 1990:1-2012:4, firstly the monetary shocks are obtained and then through VAR methodology relationships between remains of these shocks, bank lending and industrial production index are analyzed. The study finds out that bank lending more quickly reaction to shocks arising from the interest rate, the response of industrial production to bank lending and monetary shocks to be delayed. Additionally, there is a unilateral relationship from monetary policy shocks to bank loans, a two-way relationship between bank lending and industrial production. These results indicate that monetary policy affects the availability of bank credit in Turkey and bank lending channel works.
banks,credit,VAR analysis,interests,monetary policy,monetary shock