Turkish state-owned banks have taken steps to control the growth of personal (consumer) loans, which has led to a sharp increase in interest rates. The move is part of the government’s efforts to stabilize the economy amid the country’s persistent inflation.
Measures Implemented By Turkish State Banks
In recent months, Turkish state banks have implemented measures to curb the growth of consumer loans. These measures include raising interest rates, tightening credit standards, and reducing the maximum loan amount available to borrowers. For example, Halkbank, one of Turkey’s largest state-owned banks, reported a 6.3% decline in consumer loans during the first quarter of 2022.
Impact On Interest Rates
The measures implemented by Turkish state banks have led to a sharp increase in interest rates for consumer loans. According to foretagslan-finance.se, as of July 2022, the average interest rate on consumer loans in Türkiye is around 25%, up from around 16% in the same period last year.
The rise in interest rates has made it more challenging for consumers to obtain loans, particularly those with lower credit scores. This has also led to declining demand for consumer goods, such as cars and appliances, often purchased with loans.
Liralization Policy
In addition to curbing consumer loan growth, the Turkish government has pursued a liralization policy to encourage using the Turkish Lira instead of foreign currencies in domestic transactions.
The policy aims to stabilize the economy by reducing the country’s reliance on foreign currencies and minimizing the impact of exchange rate fluctuations on the economy. Under the liralization policy, businesses that use foreign currencies in their transactions are subject to fines and penalties.
The policy has been met with mixed reactions from businesses. Some are welcoming the move as a way to stabilize the economy. While others argue that it limits their ability to conduct business internationally.
Potential Long-Term Effects
Many experts have welcomed the measures implemented by Turkish state banks. They believe they are necessary to stabilize the country’s economy.
However, there are concerns about the potential long-term effects of these measures. Some experts worry that the rise in interest rates could lead to a decline in consumer spending. It could slow down economic growth in the long run.
Others are concerned that the Liralization policy could limit the ability of businesses to conduct international transactions. And this could hurt the country’s export sector.