Journal of Business & Economic Policy

Interest Rate Pass Through in Turkey: The Measurement of the Monetary Transmission Mechanism Dynamics
İlyas ŞIKLAR, Emrah DOĞAN, Mehmet DİNÇ

Abstract
In this study it is aimed to investigate the transmission mechanism of monetary policy interest rate to personal consumer loans interest rate, deposit interest rate, GDP and prices in Turkey. In order to investigate the possible effects of changes in policy rates stemming from financial market conditions and monetary policy applications on transmission via interest rate channel, the ARDL methodology is used. The results obtained show that the level of pass-through effect of policy rate to retail interest rates of the banking sector is greater than the policy rate’s effect on GDP and prices. Although the existence of high pass-through effect to retail interest rates, since it represents an uncompleted characteristic, the effect of policy rate on GDP and prices remains low. However, the effects of policy rate on GDP and prices are positive and negative, respectively.

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