Abstract
Transmission channels of monetary policy are grouped under five categories: interest rates, asset prices, exchange rates, bank credits (loans) and expectations. In this study for Turkey, the relationship between the industrial production index and the loans provided by deposit and participation banks to the private sector, in the context of the bank loans transmission channel, are discussed.
 In the study, this long-term relationship for the period 2007:Q1 - 2021:Q1 was examined by Johansen Cointegration analysis. Vector Error Correction Model (VEC) was used to detect long- and short-term relationships. According to the results, the industrial production index and the loans provided from the banking sector to the private sector move together in the long- and the short-run. Short-run deviations do come to balance in the long-run. A causality relationship is established between the series in the long-run. Co-integration and causality relationships in the long-run could not be determined between the loans provided by participation banks and the industrial production.
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