nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2006‒12‒22
one paper chosen by
Iulia Igescu
Global Insight, GmbH

  1. How Far Can Domestic Credit Growth Explain Speculative Attacks? Empirical Evidence from Turkey By Mete Feridun

  1. 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

This nep-fdg issue is ©2006 by Iulia Igescu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.