Economic uncertainty and credit crunch - Evidence from an emerging market

Rhoades S., Guner Z.

EMERGING MARKETS FINANCE AND TRADE, vol.39, no.4, pp.5-23, 2003 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 39 Issue: 4
  • Publication Date: 2003
  • Doi Number: 10.1080/1540496x.2003.11052547
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.5-23
  • Keywords: bank loans, credit crunch, economic uncertainty
  • Middle East Technical University Affiliated: Yes


Using both univariate and multivariate analyses, this paper attempts to determine whether a credit crunch occurred in the Turkish economy during the 1990s. It also addresses the question of whether this credit crunch was a supply-side- or a demand-side-originated phenomenon. Economic uncertainty is proxied by unanticipated inflation. The analyses are carried out by controlling for political uncertainty as well. The results indicate that economic uncertainty has a significantly negative impact on the supply of and the demand for loans. Also, there is evidence that a supply-side-originated credit crunch occurred in the Turkish economy.