Factors Affecting the Interest Rates in Turkey in the period of 2004-208: ARDL Bounds Testing Approach

Oktayer A., Alili T.

International Congress on Multidisciplinary Social Sciences, Ankara, Turkey, 7 - 10 May 2019, pp.191-192

  • Publication Type: Conference Paper / Summary Text
  • City: Ankara
  • Country: Turkey
  • Page Numbers: pp.191-192
  • Yıldız Technical University Affiliated: Yes


One of the ways to ensure the efficient distribution of resources and high economic growth rates in the economy is low interest rates. Interest rates play a decisive role in how investors evaluate their savings. At this point, the question of the factors that determine the interest rates comes to the fore that, starting from the Classical School of Thought, all other schools made various explanations about the determination of the interest rate. Today, when the factors affecting the interest rate are investigated, the studies of these schools are taken as basis. In this study, factors affecting the interest rates in Turkey are being investigated. In the study, quarterly data for the period of 2004-2018 were used. ARDL Bounds Testing procedure developed by Peseran, Shin and Smith (2001) was used in order to test the existence of the relationship between the variables in accordance with the unit root test results. The findings indicate that there is a long-run cointegrating relationship between the variables. The long run results are significant at 5% level and the signs of the coefficients are consistent with the expectations. In the long run, there is a positive and significant effect between real public domestic debt stock, real effective exchange rate, inflation and LIBOR rate and the dependent variable. A negative and significant relationship was found between real M2 money supply and consumer confidence index and dependent variable.