| By: |
Mete Feridun (Department of Economics, Loughborough University) |
| Abstract: |
Economies are susceptible to speculative attacks regardless of whether they
use fixed or floating exchange rates. Turkish experience in the last two
decades constitutes one of the most prominent examples proving this verdict.
It is widely accepted that there is a link between domestic credit and
speculative attacks on the currency. Nevertheless, the literature on currency
crises clearly lacks a country-specific study that addresses the long-run
relationship between this indicator and the speculative pressure in the
exchange market. This article aims at filling this gap in the literature using
monthly Turkish time series data spanning the period 1984:04- 2006:11. Results
of the ADF unit root tests suggest that the series are stationary. Hence, no
cointegration analysis was carried out before the Granger-causality tests.
Granger causality tests fail to establish a causal relationship between
domestic credit and exchange market pressure. |
| Keywords: |
Speculative attacks; currency crises; domestic credit. |
| JEL: |
F3 E44 |
| Date: |
2006–12 |
| URL: |
http://d.repec.org/n?u=RePEc:lbo:lbowps:2006_23&r=fdg |