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Year 2021, Volume: 1 Issue: 2, 81 - 99, 15.07.2021

Abstract

References

  • Abo-Zaid, S., & Tuzemen, D. (2012). Inflation Targeting: A Three-Decade Perspective. Journal of Policy Modeling, 34(5), 621-645. Allen, F., & Rogoff, K. (2011). Asset Prices, Financial Stability and Monetary Policy.
  • Andersena, T. B., Malchow-Møller, N., & Nordvig, J. (2015). Inflation targeting and macroeconomic performance since the Great Recession. Oxford Economic Papers, 67(3), 598–613.
  • Armesh, H., Salarzehi, H., Yaghoobi, N. M., & Heydari, A. (2010). Causes of Inflation in the Iranian Economy. International Review of Business Research Papers, 6(3), 30-44.
  • Asutay, M. (2007). A Political Economy Approach to Islamic Economic Systemic Understanding for an Alternative Economic System. Kyoto Bulletin of Islamic Area Studies, 1(2), 3-18.
  • Boyd, J. H., Levine, R., & Smith, B. (2001). The Impact of Inflation on Financial Sector Performance. Journal of Monetary Economics, 47(2), 221-248.
  • Bölükbaş, M. (2019). Türkiye’de Enflasyon Cari Açık ve Bankacılık Sektörü Kredileri: 2006-2018 Dönemi İçin Bir İnceleme. Social Sciences Research Journal, 8(2), 77-92.
  • Central Bank of Turkey. (2013). Enflasyon ve Fiyat İstikrarı. Ankara.
  • Cevik, S., & Charap, J. (2011). The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey. IMF Working Paper No. 11/156.
  • Chapra, M. U. (1981). Monetary Policy in an Islamic Economy. International Seminar on Monetary and Fiscal Economics of Islam. Islamabad.
  • Durmus, H. (2018). Türkiye'de Enflasyon Hedeflemesi: Örtük Enflasyon ve Açık Enflasyon Üzerine Bir Değerlendirme. Sosyal Bilimler Enstitüsü Dergisi, 6(11), 181-201.
  • Eğilmez, M. (2012). Kendime Yazılar. Enflasyon: http://www.mahfiegilmez.com/2012/09/enflasyon.html
  • Engin, M. B. (2011). Bir Para Politikası Aracı Olarak Enflasyon Hedeflemesi. Sosyal Bilimler Dergisi(2), 45-53.
  • Ergeç, E. H., & Gülümser, A. B. (2013). Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey. Applied Economics, 45(17), 2381-2388.
  • Franzoni, S., & Allali, A. A. (2018). Principles of Islamic Finance and Principles of Corporate Social Responsibility: What Convergence? Sustainability, 10(3), 637.
  • Freedman, C., & Laxton, D. (2009, April). Why Inflation Targeting. IMF Working Paper No. 09/86.
  • Freidman, M. (1970). The Counter Revolution in Monetary Theory. London: Institute of Economic Affairs.
  • Genc, I., & Balcilar, M. (2012). Effectiveness of Inflation Targeting in Turkey. Emerging Markets Finance & Trade, 48(5), 35-47.
  • Gün, A. (2003). Düşük Enflasyon Ortamının Bankacılık Sektörüne Olan Etkileri ve Alınması Gerekebilecek Önlemlerin Değerlendirilmesi. Yüksek Lisans Tezi. İstanbul Üniversitesi Sosyal Bilimler Enstitüsü.
  • Hubbard, R. G., & O'Brien, A. P. (2010). Economics. Boston: Pearson Education.
  • Huybens, E., & Smith, B. (1999). Inflation, Financial Markets and Long-Run Real Activity. Journal of Monetary Economics, 43(2), 283-315.
  • Islam, M. S., & Uddin, M. T. (2011). Inflation Targeting as the Monetary Policy Framework: Bangladesh Perspective. Economia Seria Management, 14(1), 106-119.
  • Islam, R., Ghani, A. B., Mahyudin, E., & Manickam, N. (2017). Determinants of Factors that Affecting Inflation in Malaysia. International Journal of Economics and Financial Issues, 7(2), 355-364.
  • Khan, S. Q. (2011). How to Prosper the Islamic Way. Mumbai: Tanveer Publication.
  • Khatat, M. E. (2016). Monetary Policy in the Presence of Islamic Banking. IMF Working Paper No. 16/72.
  • Kia, A. (2014). Inflation: Islamic and Conventional Economic Systems - Evidence. International Journal of Economic Perspectives, 8(3), 19-40. Kılcı, E. N. (2019). Analysis of the Relationship Between Inflation and Central Bank Interest Rates in Turkey: Fourier Approach. International Journal of Economic and Administrative Studies(22), 135-146.
  • Korkut, C., & Özgür, Ö. (2017). Is There a Link Between Profit Share Rate of Participation Banks and Interest Rate: The Case of Turkey. Journal of Economic Cooperation and Development, 38(2), 135-158.
  • Mahmood, H., Khalid, S., Waheed, A., & Arif, M. (2019). Impact of Macro Specific Factor and Bank Specific Factor on Bank Liquidity using FMOLS Approach. Emerging Science Journal, 3(3), 168-178.
  • Mishkin, F. S. (2001). Inflation Targeting. Columbia: An Encyclopedia of Macroeconomics.
  • Mishkin, F. S. (2011, February). Monetary Policy Strategy: Lessons Fron the Crisis. NBER Working Paper No. 16755. Frankfurt.
  • Mulkiaman, M. Z. (2016). Impact of Monetary Policy and Macroeconomic Environment on Islamic Banking Operations in a Dual Banking System of Malaysia. Durham Theses. United Kingdom: Durham Doctoral Training Centre for Islamic Finance.
  • Ndiaye, N. D., & Masih, M. (2017). Is Inflation Targeting the Proper Monetary Policy Regime in a Dual Banking System? New Evidence from ARDL Bounds Test.
  • Ozturk, N., & Karagoz, K. (2012). Relationship Between Inflation and Financial Development: Evidence from Turkey. Uluslararası Alanya İşletme Fakültesi Dergisi, 4(2), 81-87.
  • Öztürk, F. (2009). Türkiye'de Enflasyon Dinamikleri ve Hedeflemesi Çerçevesinde Büyüme Olgusu. Yüksek Lisans Tezi. Sakarya Üniversitesi Sosyal Bilimler Enstitüsü.
  • Poon, W. C., & Tong, G.-K. (2009). The Feasibility of Inflation Targeting in Malaysia. Economics Bulletin, 29(2), 1035-1045.
  • Şahan, B. (2018). Enflasyon Hedeflemesi Stratejisinde Türkiye Cumhuriyet Merkez Bankası Faiz Politikasının Etkisi. Yüksek Lisans Tezi. Balıkesir Üniversitesi Sosyal Bilimler Enstitüsü.
  • The Banks Association of Turkey. (2019). https://www.tbb.org.tr/en/home
  • The Participation Banks Association of Turkey. (2019). http://www.tkbb.org.tr/en
  • Torun, M., & Karanfil, M. (2016). 1980-2013 Dönemi Türkiye Ekonomisinde Enflasyon ve Faiz Oranı Arasındaki İlişki. Journal of Administrative Sciences, 14(27), 473-490.
  • Totonchi, J. (2011). Macroeconomic Theories of Inflation. International Conference on Economics and Finance Research. 4, pp. 459-462. IACSIT Press.
  • Umar, M., Maijama’a, D., & Adamu, M. (2014). Conceptual Exposition of the Effect of Inflation on Bank Performance. Journal of World Economic Research, 3(5), 55-59.
  • Visokavičienė, B. (2010). Monetary Policy Creates Macroeconomic Stability. Ekonomika, 89(3), 55-68.
  • Wu, T. Y. (2004). Does Inflation Targeting Reduce Inflation? An Analysis for the OECD Industrial Countries. Central Bank of Brazil Working Papers Series 83.

An Empirical Analysis of Inflation Targeting in Dual Banking System: Case Study of Turkey.

Year 2021, Volume: 1 Issue: 2, 81 - 99, 15.07.2021

Abstract

Inflation has many important macroeconomic issues in many countries like Turkey. The uncertainty resulting from high inflation is one of the negativities that closely affect the financial sector. The purpose of this paper is to explore the feasibility of inflation targeting monetary policy in the dual banking system. The study investigates the long-run relationship between inflation rate, interest rate, real effective exchange rate, narrow money, and profit rate. The data collected were monthly and the period is from 2007 to 2017. The result of the study showed that interest rate and narrow money have a positive correlation with the inflation rate. Inflation targeting may not be a proper monetary policy for the financial system of Turkey. Because of the high sensitivity, it is not always easy to achieve targeted inflation. Instead of inflation targeting, interest rate targeting may help monetary policies to exert more influence on the financial sector. Keeping the interest rate under control may be a more useful monetary policy. In this way, the effects of monetary policies will be reflected more directly in the financial sector. If the monetary policies implemented are become more effective for both types of finance, their contribution to the economy will be enhanced, and controlling the macroeconomic targets will be more easily fulfilled. Thus, controlling the interest rate will give the authorities more control over Islamic finance in the sector.

References

  • Abo-Zaid, S., & Tuzemen, D. (2012). Inflation Targeting: A Three-Decade Perspective. Journal of Policy Modeling, 34(5), 621-645. Allen, F., & Rogoff, K. (2011). Asset Prices, Financial Stability and Monetary Policy.
  • Andersena, T. B., Malchow-Møller, N., & Nordvig, J. (2015). Inflation targeting and macroeconomic performance since the Great Recession. Oxford Economic Papers, 67(3), 598–613.
  • Armesh, H., Salarzehi, H., Yaghoobi, N. M., & Heydari, A. (2010). Causes of Inflation in the Iranian Economy. International Review of Business Research Papers, 6(3), 30-44.
  • Asutay, M. (2007). A Political Economy Approach to Islamic Economic Systemic Understanding for an Alternative Economic System. Kyoto Bulletin of Islamic Area Studies, 1(2), 3-18.
  • Boyd, J. H., Levine, R., & Smith, B. (2001). The Impact of Inflation on Financial Sector Performance. Journal of Monetary Economics, 47(2), 221-248.
  • Bölükbaş, M. (2019). Türkiye’de Enflasyon Cari Açık ve Bankacılık Sektörü Kredileri: 2006-2018 Dönemi İçin Bir İnceleme. Social Sciences Research Journal, 8(2), 77-92.
  • Central Bank of Turkey. (2013). Enflasyon ve Fiyat İstikrarı. Ankara.
  • Cevik, S., & Charap, J. (2011). The Behavior of Conventional and Islamic Bank Deposit Returns in Malaysia and Turkey. IMF Working Paper No. 11/156.
  • Chapra, M. U. (1981). Monetary Policy in an Islamic Economy. International Seminar on Monetary and Fiscal Economics of Islam. Islamabad.
  • Durmus, H. (2018). Türkiye'de Enflasyon Hedeflemesi: Örtük Enflasyon ve Açık Enflasyon Üzerine Bir Değerlendirme. Sosyal Bilimler Enstitüsü Dergisi, 6(11), 181-201.
  • Eğilmez, M. (2012). Kendime Yazılar. Enflasyon: http://www.mahfiegilmez.com/2012/09/enflasyon.html
  • Engin, M. B. (2011). Bir Para Politikası Aracı Olarak Enflasyon Hedeflemesi. Sosyal Bilimler Dergisi(2), 45-53.
  • Ergeç, E. H., & Gülümser, A. B. (2013). Impact of Interest Rates on Islamic and Conventional Banks: The Case of Turkey. Applied Economics, 45(17), 2381-2388.
  • Franzoni, S., & Allali, A. A. (2018). Principles of Islamic Finance and Principles of Corporate Social Responsibility: What Convergence? Sustainability, 10(3), 637.
  • Freedman, C., & Laxton, D. (2009, April). Why Inflation Targeting. IMF Working Paper No. 09/86.
  • Freidman, M. (1970). The Counter Revolution in Monetary Theory. London: Institute of Economic Affairs.
  • Genc, I., & Balcilar, M. (2012). Effectiveness of Inflation Targeting in Turkey. Emerging Markets Finance & Trade, 48(5), 35-47.
  • Gün, A. (2003). Düşük Enflasyon Ortamının Bankacılık Sektörüne Olan Etkileri ve Alınması Gerekebilecek Önlemlerin Değerlendirilmesi. Yüksek Lisans Tezi. İstanbul Üniversitesi Sosyal Bilimler Enstitüsü.
  • Hubbard, R. G., & O'Brien, A. P. (2010). Economics. Boston: Pearson Education.
  • Huybens, E., & Smith, B. (1999). Inflation, Financial Markets and Long-Run Real Activity. Journal of Monetary Economics, 43(2), 283-315.
  • Islam, M. S., & Uddin, M. T. (2011). Inflation Targeting as the Monetary Policy Framework: Bangladesh Perspective. Economia Seria Management, 14(1), 106-119.
  • Islam, R., Ghani, A. B., Mahyudin, E., & Manickam, N. (2017). Determinants of Factors that Affecting Inflation in Malaysia. International Journal of Economics and Financial Issues, 7(2), 355-364.
  • Khan, S. Q. (2011). How to Prosper the Islamic Way. Mumbai: Tanveer Publication.
  • Khatat, M. E. (2016). Monetary Policy in the Presence of Islamic Banking. IMF Working Paper No. 16/72.
  • Kia, A. (2014). Inflation: Islamic and Conventional Economic Systems - Evidence. International Journal of Economic Perspectives, 8(3), 19-40. Kılcı, E. N. (2019). Analysis of the Relationship Between Inflation and Central Bank Interest Rates in Turkey: Fourier Approach. International Journal of Economic and Administrative Studies(22), 135-146.
  • Korkut, C., & Özgür, Ö. (2017). Is There a Link Between Profit Share Rate of Participation Banks and Interest Rate: The Case of Turkey. Journal of Economic Cooperation and Development, 38(2), 135-158.
  • Mahmood, H., Khalid, S., Waheed, A., & Arif, M. (2019). Impact of Macro Specific Factor and Bank Specific Factor on Bank Liquidity using FMOLS Approach. Emerging Science Journal, 3(3), 168-178.
  • Mishkin, F. S. (2001). Inflation Targeting. Columbia: An Encyclopedia of Macroeconomics.
  • Mishkin, F. S. (2011, February). Monetary Policy Strategy: Lessons Fron the Crisis. NBER Working Paper No. 16755. Frankfurt.
  • Mulkiaman, M. Z. (2016). Impact of Monetary Policy and Macroeconomic Environment on Islamic Banking Operations in a Dual Banking System of Malaysia. Durham Theses. United Kingdom: Durham Doctoral Training Centre for Islamic Finance.
  • Ndiaye, N. D., & Masih, M. (2017). Is Inflation Targeting the Proper Monetary Policy Regime in a Dual Banking System? New Evidence from ARDL Bounds Test.
  • Ozturk, N., & Karagoz, K. (2012). Relationship Between Inflation and Financial Development: Evidence from Turkey. Uluslararası Alanya İşletme Fakültesi Dergisi, 4(2), 81-87.
  • Öztürk, F. (2009). Türkiye'de Enflasyon Dinamikleri ve Hedeflemesi Çerçevesinde Büyüme Olgusu. Yüksek Lisans Tezi. Sakarya Üniversitesi Sosyal Bilimler Enstitüsü.
  • Poon, W. C., & Tong, G.-K. (2009). The Feasibility of Inflation Targeting in Malaysia. Economics Bulletin, 29(2), 1035-1045.
  • Şahan, B. (2018). Enflasyon Hedeflemesi Stratejisinde Türkiye Cumhuriyet Merkez Bankası Faiz Politikasının Etkisi. Yüksek Lisans Tezi. Balıkesir Üniversitesi Sosyal Bilimler Enstitüsü.
  • The Banks Association of Turkey. (2019). https://www.tbb.org.tr/en/home
  • The Participation Banks Association of Turkey. (2019). http://www.tkbb.org.tr/en
  • Torun, M., & Karanfil, M. (2016). 1980-2013 Dönemi Türkiye Ekonomisinde Enflasyon ve Faiz Oranı Arasındaki İlişki. Journal of Administrative Sciences, 14(27), 473-490.
  • Totonchi, J. (2011). Macroeconomic Theories of Inflation. International Conference on Economics and Finance Research. 4, pp. 459-462. IACSIT Press.
  • Umar, M., Maijama’a, D., & Adamu, M. (2014). Conceptual Exposition of the Effect of Inflation on Bank Performance. Journal of World Economic Research, 3(5), 55-59.
  • Visokavičienė, B. (2010). Monetary Policy Creates Macroeconomic Stability. Ekonomika, 89(3), 55-68.
  • Wu, T. Y. (2004). Does Inflation Targeting Reduce Inflation? An Analysis for the OECD Industrial Countries. Central Bank of Brazil Working Papers Series 83.
There are 42 citations in total.

Details

Primary Language English
Subjects Economics
Journal Section Research Articles
Authors

Tawfik Azrak 0000-0001-9059-2115

Fatma Sayar This is me 0000-0001-6317-2625

Publication Date July 15, 2021
Submission Date March 24, 2021
Published in Issue Year 2021 Volume: 1 Issue: 2

Cite

APA Azrak, T., & Sayar, F. (2021). An Empirical Analysis of Inflation Targeting in Dual Banking System: Case Study of Turkey. Journal of Islamic Economics, 1(2), 81-99.

Journal of Islamic Economics is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License (CC BY NC).