International Conference on Eurasian Economies
1-3 July 2014 – Skopje, MACEDONIA
Paper detail
Paper ID : 1091
Status : Paper published
Language : Turkish
Topic : Finance and Financial Crises
Presenter: Mr. Ebubekir Karaçayır
Session : 2C Finansal Kriz I
Relationship between Current Account Deficit and Credit Volume after the Global Financial Crisis: The Case of Turkey
Küresel Kriz Sonrasında Cari Açık ve Kredi Hacmi Arasındaki İlişki: Türkiye Örneği
- Asst. Prof. Dr. Sinem Yapar Saçık (Karamanoğlu Mehmetbey University, Türkiye)
- Mr. Ebubekir Karaçayır (Karamanoğlu Mehmetbey University, Türkiye)
Abstract
An important macroeconomic variable, current account deficit as percentage of gross domestic product is considered as an indicator of an economic crisis when it is above 5%. In the economies where current account deficit is a problem, source of current account deficit should be determined for the solution. In the case of an interaction between credit expansion and current account, policies using a credit mechanism can be applied to stabilize the current account balance. In order to determine the relationship between current account deficit and credit volume before and after the financial crisis, visual graphics based on data will be utilized. This paper analysis the cointegration, long and short run causality relationship between current account deficit and consumer credits for Turkey over the period 2004Q3-2013Q3. The results of Johansen cointegration test indicate a cointegration between these variables. The empirical results show that there is bidirectional long and short run casuality relationship among variables. After the financial crisis of 2008, the increase in credit expansion increased domestic consumption depending on imports causing deterioration in current account deficit. There are difficulties of low finance qualities of this current account deficit and the realization of structural transformation in favor of exports in short term. Targeting a continuing economic growth increases energy dependency and import of investment goods, so puts credit mechanism policies forward to fight with current account deficit. Limiting the credit volume more than necessary to reduce current account deficit can worsen the various macroeconomic variables.
JEL codes: E42, E51
Yapar Saçık, Sinem , Karaçayır, Ebubekir (2014). "Relationship between Current Account Deficit and Credit Volume after the Global Financial Crisis: The Case of Turkey" in Proceedings of International Conference of Eurasian Economies 2014, pp.507-514, Skopje, MACEDONIA.
DOI: https://doi.org/10.36880/C05.01091
