Türkiye için Finansal Koşullar Endeksi (Financial Conditions Index for Turkey)

Türkiye için Finansal Koşullar Endeksi (Financial Conditions Index for Turkey)


Financial Conditions Index for Turkey




Hakan Kara, Pınar Özlü, Deren Ünalmış




May 2015


In the aftermath of the global crisis, the monetary policy framework of the Central Bank of the Republic of Turkey has been modified to include liquidity and credit policies. Hence, the new framework has increased the importance of monitoring and summarizing the information content of a broad list of financial indicators jointly, in assessing whether the overall policy stance is restrictive or accommodative. This study develops  a “financial  conditions  index”  for  Turkey  using  a  range  of monetary  and  financial indicators. The index is basically constructed using a weighted average of indicators such as exchange rate, interest rate, risk premium, credit conditions and yield curve, where weights are constructed according to the performances of these indicators in forecasting the economic activity. It is shown that the relationship between the financial conditions index and the economic activity has changed through time, although the relationship between the index and the credit growth has been quite stable. We also try to decompose the drivers of the financial conditions into external and other components. Our findings suggest that a great bulk of the movements in financial conditions can be explained by external conditions (global risk appetite, U.S. monetary policy and foreign demand).


Financial conditions index; Monetary policy; Credit growth; Forecast performance; VAR

JEL Codes:

E43; E52; C22

Türkiye için Finansal Koşullar Endeksi (Financial Conditions Index for Turkey)
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