Zubeyir Kilinc

The effect of foreign income on economic performance of a small-open economy: evidence from Turkey

The effect of a shock in the foreign economic performance on the domestic economy is an attractive research area. It has consistently been found that this effect is non-negligible. However, the countries examined are mostly developed countries. In this study, the effects of a shock in foreign economy on the economic performance of Turkey are examined. The estimates suggest that a positive shock in the foreign economy positively affects Turkish output, increases the inflation rate, and appreciates the real exchange rate.

Non-Core bank liabilities and credit growth: Evidence from an emerging economy ☆ ☆. The views expressed here are those of the authors and do not reflect the views of the Central Bank of the Republic of Turkey.

Abstract The composition of bank liabilities has captured a lot of attention especially after the global financial crisis of 2008–2009. It is argued that a compositional change in non-core liabilities reflects the different stages of financial cycle. Banks usually fund their credits with core liabilities, which grow with households’ wealth, but when there is a faster growth in credits compared to deposits, the banks often resort to non-core liabilities to meet the excess demand for loans. This chapter analyses the relationship between non-core liabilities and credits in a small open economy, namely Turkey. It investigates the relationship under alternative settings and presents consistent evidence on a robust relationship between credits and non-core liabilities under all frameworks. The study also verifies that elevated demand for credit may induce some increase in non-core liabilities. Finally, the relationship between non-core liabilities and credit growth is also affirmed in the long run.

Crude Oil Price and Retail Price of Gasoline: An Empirical Analysis of Asymmetric Relationship

In this study, we provide empirical evidence on the asymmetric relationship between the cost of crude oil and retail price of gasoline in Turkey. We disentangle the cost channel into two parts: the crude oil price in foreign currency and exchange rate. Then, we estimate the determinants of retail prices via an NARDL model that addresses asymmetry in both the long-run and the short-run. We show that the impacts of the two channels differ in a significant way. In particular, the transmission of an exchange rate shock to the retail price is more rapid and more significant in magnitude compared to that of a shock to crude oil price in foreign currency. Our results show that the source of asymmetric relationship is mainly exchange rate. While the response of retail price to currency depreciation is more rapid and larger in magnitude compared to that of appreciation, its response to the movements in crude oil price in foreign currency is largely symmetric. Finally, the estimation results reveal that moderate changes in exchange rate and international price of crude oil are hardly reflected to the retail price.