Lending behaviors of Turkish banks during elections and business cycles

Abstract

This thesis examines the lending behavior of Turkish banks during elections and business cycles using quarterly data for the period December 2001-September 2016. Banks are classified on the basis of their ownership as public, private and foreign banks and their deposit collecting ability as deposit and development banks. Five general election and three local election events are studied during this period. I find that all banks except foreign development banks increase their nominal and real loan growth rates during general elections. Loan growth rates of public deposit and development banks are found to increase during local elections more than that of private banks. The results of one-step system GMM model suggests that loan growth rate of public banks is less pro-cyclical than that of private banks. Public deposit banks are found to lend pro-cyclically while public development banks are not. It is also found that public banks increase their loan growth rate in periods with negative GDP growth rate.