Understanding the Recent Growth in Consumer Loans and Credit Cards in Emerging Markets

Evidence from Turkey

Murat Mazibas (Lead / Corresponding author), Yusuf Tuna

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    Abstract

    In recent years, the surge in household indebtedness to historical heights has become a significant concern for developed economies. A similar trend has been witnessed in emerging market countries including Turkey. Our objective is to help further understand the dynamics of the recent growth in consumer loans and credit cards (CLCC) in Turkey. For this purpose, we investigate the long-term equilibrating relationships and short-term deviations from the equilibrium, and explore the determinants, directions, and strengths of causality relationships between CLCC and the selected macroeconomic variables, and analyze the dynamic interactions among the variables in the post-sample period by analyzing how CLCC responds to the shocks given to other macroeconomic variables and the contribution of each variable on the forecast variability of CLCC. We use monthly data for the period of January 2004—December 2013 of seven macroeconomic variables of money supply, interest rate, income, consumer confidence, inflation, stock market, and consumer goods imports. On empirical findings, we make suggestions about which policy tools should be used to influence, and if necessary to manage, the growth in CLCC.
    Original languageEnglish
    Pages (from-to)2333-2346
    Number of pages14
    JournalEmerging Markets Finance and Trade
    Volume53
    Issue number10
    Early online date25 Aug 2017
    DOIs
    Publication statusPublished - 2017

    Fingerprint

    Turkey
    Loans
    Emerging markets
    Credit cards
    Macroeconomic variables
    Deviation
    Money supply
    Long-term relationships
    Stock market
    Indebtedness
    Import
    Causality
    Interest rates
    Household
    Consumer confidence
    Inflation
    Income
    Interaction
    Policy tools

    Keywords

    • ARDL models
    • cointegration
    • consumer loans
    • credit cards
    • emerging markets
    • Granger causality
    • impulse response
    • monetary policy
    • variance decomposition

    Cite this

    @article{04c71bcbeeac439e8765a1918a3759b6,
    title = "Understanding the Recent Growth in Consumer Loans and Credit Cards in Emerging Markets: Evidence from Turkey",
    abstract = "In recent years, the surge in household indebtedness to historical heights has become a significant concern for developed economies. A similar trend has been witnessed in emerging market countries including Turkey. Our objective is to help further understand the dynamics of the recent growth in consumer loans and credit cards (CLCC) in Turkey. For this purpose, we investigate the long-term equilibrating relationships and short-term deviations from the equilibrium, and explore the determinants, directions, and strengths of causality relationships between CLCC and the selected macroeconomic variables, and analyze the dynamic interactions among the variables in the post-sample period by analyzing how CLCC responds to the shocks given to other macroeconomic variables and the contribution of each variable on the forecast variability of CLCC. We use monthly data for the period of January 2004—December 2013 of seven macroeconomic variables of money supply, interest rate, income, consumer confidence, inflation, stock market, and consumer goods imports. On empirical findings, we make suggestions about which policy tools should be used to influence, and if necessary to manage, the growth in CLCC.",
    keywords = "ARDL models, cointegration, consumer loans, credit cards, emerging markets, Granger causality, impulse response, monetary policy, variance decomposition",
    author = "Murat Mazibas and Yusuf Tuna",
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    year = "2017",
    doi = "10.1080/1540496X.2016.1196895",
    language = "English",
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    T1 - Understanding the Recent Growth in Consumer Loans and Credit Cards in Emerging Markets

    T2 - Evidence from Turkey

    AU - Mazibas, Murat

    AU - Tuna, Yusuf

    N1 - Copyright © Taylor & Francis Group, LLC.

    PY - 2017

    Y1 - 2017

    N2 - In recent years, the surge in household indebtedness to historical heights has become a significant concern for developed economies. A similar trend has been witnessed in emerging market countries including Turkey. Our objective is to help further understand the dynamics of the recent growth in consumer loans and credit cards (CLCC) in Turkey. For this purpose, we investigate the long-term equilibrating relationships and short-term deviations from the equilibrium, and explore the determinants, directions, and strengths of causality relationships between CLCC and the selected macroeconomic variables, and analyze the dynamic interactions among the variables in the post-sample period by analyzing how CLCC responds to the shocks given to other macroeconomic variables and the contribution of each variable on the forecast variability of CLCC. We use monthly data for the period of January 2004—December 2013 of seven macroeconomic variables of money supply, interest rate, income, consumer confidence, inflation, stock market, and consumer goods imports. On empirical findings, we make suggestions about which policy tools should be used to influence, and if necessary to manage, the growth in CLCC.

    AB - In recent years, the surge in household indebtedness to historical heights has become a significant concern for developed economies. A similar trend has been witnessed in emerging market countries including Turkey. Our objective is to help further understand the dynamics of the recent growth in consumer loans and credit cards (CLCC) in Turkey. For this purpose, we investigate the long-term equilibrating relationships and short-term deviations from the equilibrium, and explore the determinants, directions, and strengths of causality relationships between CLCC and the selected macroeconomic variables, and analyze the dynamic interactions among the variables in the post-sample period by analyzing how CLCC responds to the shocks given to other macroeconomic variables and the contribution of each variable on the forecast variability of CLCC. We use monthly data for the period of January 2004—December 2013 of seven macroeconomic variables of money supply, interest rate, income, consumer confidence, inflation, stock market, and consumer goods imports. On empirical findings, we make suggestions about which policy tools should be used to influence, and if necessary to manage, the growth in CLCC.

    KW - ARDL models

    KW - cointegration

    KW - consumer loans

    KW - credit cards

    KW - emerging markets

    KW - Granger causality

    KW - impulse response

    KW - monetary policy

    KW - variance decomposition

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