Political Bussiness Cycle in Türkiye: Evidence from Bank Loans

Objective: The objective of this study is to investigate the change in domestic bank loans within the scope of opportunistic political business cycle and partisan political business cycle theories. Theoretical Framework: The economic fluctuations resulting from the ruling parties' use of public finance and monetary policy tools to win elections are referred to as the political business cycles. These theories emphasize that governments intervene in economic life for political reasons and that macroeconomic fluctuations are created by political fluctuations. Method: This study examines the political bussiness cycle theories in terms of bank loans by employing Newey- West (1987) estimation method in Türkiye for the period of 2000Q3-2024Q1. Appropriate unit root tests are carried out according to the number of structural breaks. Results and Discussion: As a result of empirical analysis, the changes in domestic bank lending are found to be consistent with the political business cycle theories. Findings indicate that in Turkey, periods such as elections, referendums, crises, and pandemics directly affect credit volumes; especially through public banks, expansionary credit policies are implemented. This provides evidence for the existence of the political business cycle theory. Research Implications: Economic growth which is underline on SDG is effected by macro economic fluctuationas. Findings of study offers valuable contrubutions in order to maintain stabilized economic enviroment and sustainable economc growth. Originality/Value: Unlike the studies in the literature, this will be the first study to examine the political business cycle theory in the presidential government system, which is a kind of presidential system for Türkiye.