Author/Authors
KOÇ, Ümit Türkiye Cumhuriyet Merkez Bankası - Bilişim Teknolojileri Genel Müdürlüğü, Turkey , ŞAHİN, Hasan Ankara Üniversitesi - Siyasal Bilgiler Fakültesi - İktisat Bölümü, Turkey
Title Of Article
Monetary Transmission Mechanism: Firm Balance Sheet Channel and Turkey
شماره ركورد
44474
Abstract
According to the firm balance-sheet channel of monetary transmission mechanism, since external finance is costly than internal finance, financially constrained firms chose internal finance. Monetary and fiscal authorities should consider the existence of the firm balance-sheet channel, when they design policies if it operates. A rise in real interest rates causes a rise in firm’s debt, fall in net worth and as a result of these changes, a rise in the marginal cost of external financing occurs. Consequently firms’ ability for investing and job creation decreases. In an economy in which investment is positively related with cash flow, an increase in firm’s cash flow results with an inrease in firm’s investment. In this paper we examined the effect of real interest rate, real exchange rate, cash flow and sales on the investment behaviour of the firm. The panel data analysis, performed by using Central Bank of Turkey’s firm balance sheet database, shows that the firm balance-sheet channel operates in Turkey.
From Page
19
NaturalLanguageKeyword
Monetary transmission mechanism , firm balance , sheet channel , panel data
JournalTitle
Ege Academic Review (EAR)
To Page
26
JournalTitle
Ege Academic Review (EAR)
Link To Document