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I am grateful to Lorenzo Giorgianni, Hakan Kara, Davide Lombardo for helpful discussions and comments on earlier drafts of this paper.
Monetary policy operates through several other channels as well. The interest rate channel refers to the negative effect of higher (real) interest rates on consumption and investment. In an open economy like Turkey’s, the exchange rate channel can also be important, as monetary policy can bring about changes in the level of the exchange rate and, consequently, inflation, trade volumes, and investment. The balance sheet (or broad credit) channel can operate through the effect of higher interest rates on asset prices that determine the value of collateral used by firms and consumers to obtain credit.
There was little change in policy interest rates during the period.
The coefficients of the ownership and stock participation variables are also not statistically significant across specifications.
It is worth noting, however, that the June and September balance sheet data are valued at similar exchange rates ($/TRY=1.57 in June and 1.50 in September).