Makroekonomik ve Kurumsal Faktörlerin Kredi Genişlemesine Etkisi: Dünya Ekonomisi İçin Güncel Bir İnceleme
The Effect of Macroeconomic and Institutional Factors on Credit Expansion: A Current Assessment for the World Economy

Summary/Abstract: Purpose – The aim of this study is to reveal the relationship between the amounts of domestic credits, macroeconomic factors and financial development levels by providing worldwide evidence. Design/methodology/approach – This study uses the data obtained from the financial development database provided by the World Bank and covering all countries of the world and the years 2001-2019. The dependent variable is the ratio of domestic loans distributed to the private sector to gross domestic product, in the fixed effects panel regressions, while macroeconomic factors such as money supply, exchange rate, interest rate, price index are included as independent variables. Two indices are used to represent the financial institutions’ development levels. One of them shows the extent to which the borrowers and lenders are guaranteed by the laws in financial markets, the other index shows the efficiency of the debtor information provided by the credit registry institutions. Findings – This paper unveils strong findings for the positive relationship between domestic credit and expansionary monetary policy. On the other hand, it is found that the consumer price index and the domestic credits are negatively associated. The paper provides no evidence for the effect of financial institutions’ development levels on domestic credits. Discussion – While the discussions continue on the positive and negative consequences of the credit expansions in the economy, the importance of the papers those analyze the reasons of credit expansions are also increasing. This study contributes to the existing literature, which mostly emphasizes the importance of macroeconomic factors, considering the differences in financial development levels between countries. The econometric analysis applied in the study reveals the negative relationship between the consumer price index and domestic credits, and the positive relationship between money supply and domestic credit. Taken together, these adverse effects reveal that policy makers should be careful in their monetary policies designs.

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