THE EFFECT OF GLOBAL FINANCIAL CRISIS ON LENDING BEHAVIOR OF PUBLIC AND PRIVATE DEPOSIT BANKS IN TURKEY

This article analyzes lending behavior differences between public and private deposit banks in Turkey during and after the global financial crisis. The study covers the years 2005-2015. Quarterly collective financials of deposit banks (released by Banking Regulatory and Supervisory Agency of Turkey) are analyzed. The research question (whether or not there exist a significant change in differences between Turkish public and private banks’ lending behaviors after the crisis) in this study can be solved via Difference-in-Differences (‘DiD’) approach. This article concludes by suggesting that after the global financial crisis, lending behaviour of publicly owned deposit banks significantly differed from that of privately owned ones in Turkey. This is attributable to the very nature of the public banks. Literature review findings and the analysis results about Turkey indicate that unlike their privately owned rivals, public deposit banks took much more active role (as far as lending is concerned) to prevent the negative effects of the global financial crisis of 2008, which is a counter-cyclical behavior