As stated before, global crisis affected Turkish economy through four different channels. One of these channels showed impact in form of tightening of credits extended by domestic banks. Today, I would like to address credit extending behaviors for different bank groups.

Latest data we have is for the week beginning with April 17. Banks are classified under three groups: public, private and foreign. I am focusing on deposit banks. According to the classification made in the light of the data, credits extended within the country are under two categories: 'TL' credits and 'foreign exchange (FX) credits. And there are credit extended abroad. But their share in total credit volume is only 0.5 percent. Therefore, I examine only the credits deposit banks extend within the country. I make a dual comparison in the time dimension. First, I calculate the percentage increase (or decrease) from the date credits peaked to April 17. Second, I compare April 17 with the January 1.

I see that TL credits peaked on 3 October 2008. On the other hand, foreign exchange credits peak on 24 October 2008. The comparison is given in Table 1. Last column of the table gives the percentage share of credit types in total credit volume. This way, it becomes easier to have an opinion on the importance of the change in the volume of a particular credit type for overall credit market. Table 2 makes the same comparison for TL credits and foreign exchange credits.

Now, I would like to state a few findings: Assume that TL and foreign exchange credits peaked at the same date. If we compare this total peak level value with total value on 17 April, we see that credit volume decreased by 8.1 percent. This value is not purified of the inflation effect. If the inflation is also considered, rate of credit contraction rises to 11.8 percent; and this is considerably high. There is no news up to this point.

The news appears when bank groups are taken into consideration alone: Attitude of public banks is quite different from that of the other two groups. It is seen that volume of credits extended by public banks increases. It means that risk perception of the bank groups is different. So, what is the reason behind this difference? If the analysis is made for the period beginning with the end of 2008, it is possible to decide that foreign-capital banks are now more optimistic than the beginning of the crisis. Of course they are more optimistic as compared to private banks; they are still quite pessimistic as compared with public banks.

Table 1: Change in loan volume for deposit bank groups

Table 2: Change in loan volume for deposit bank groups

This commentary was published in Radikal daily on 07.05.2009