Turkey: Addendum to Giving Credit Its Due Credit
FX lending was made easier by a new decree on June 16 of last year. Before that, banks were lending to their Turkish clients from their abroad branches to bypass the regulations. Since foreign branches are not included in credit data, the new decree, to the extent that it induced the banks to lend from their domestic branches, would have somewhat exaggerated credit growth. That is yet another reason we should not make too much out of credit quantity data, as I argue convincingly (I hope) in the column.
Of course, another byproduct of this change was that non-bank external debt rollover automatically fell after the decree. In fact, the CBT has adjusted for this change and found that if the new decree had not been enacted, the corporate external debt rollover would have been 100% (the official figure was a mere 65%) in the first quarter. But this would not have effected banks in any way, so the 50% bank rollover ratio does not need to be revised.
The column also allowed me to notice an important problem in the official credit and deposit statistics. To illustrate the issue at hand, I present the following graph:
Originally published at Emre Deliveli’s Blog and reproduced here with the author’s permission.
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