Abstract—The main aim of this study is to investigate the
relationship between deposit banks’ aggregate commercial
loans to the private sector, economic activities and interest
rates in Turkey over the period from 2003:1 to 2013:2 by
utilizing Johansen cointegration and error correction models.
The cointegration analysis results show that there is a long-run
relationship between bank loans, real gross domestic product
and interest rates. Moreover, the Error Correction Model
shows the existence of the short-run negative relationship
between bank loans and interest rates. In contrast to that the
results of the study do not support the existence of the shortrun
relationship between bank loans and real gross domestic
product.
Index Terms—Loans, GDP, interbank rate, Johansen
cointegration test, VECM.
Şehnaz Bakır Yiğitbaş is with the Department of Banking and Insurance,
Ayvacık Vocational School of Higher Education, Çanakkale Onsekiz Mart
University, Canakkale, Turkey (e-mail: sehnazbakir@comu.edu.tr).
Birgül Cambazoğlu is with the Department of International Trade and
Business, Faculty of Business, Adnan Menderes University, Söke-Aydın,
Turkey(e-mail: cambirgul@yahoo.com).
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Cite: Şehnaz Bakır Yiğitbaş and Birgül Cambazoğlu, "Modeling the Relationship between Economic Activity and Bank Loans to Private Sector: A Case of Turkey," International Journal of Trade, Economics and Finance vol.5, no.5, pp. 397-400, 2014.