Basic Problems and Corresponding Risks of the Corporate Credit Market, Relating to Real Sector in Turkish Banking Sector: An Example of Construction Sector

Abstract

In this study, the main problems of the corporate credit market for crediting the real sector in Turkish Banking Sector and their impacts on credit markets are analyzed within the theoretical approaches. It has been tried to determine that if these approaches, related to risk due to the asymmetric information theory, are convenient or not for the corporate credit markets, related to the construction sector in Turkey via causality analysis. In the causality analysis specifically, it has been also tried to determine if there is causality between selected financial structure ratios of the private firms, which are short term bank loans obtained to total liabilities and long term bank loans obtained to total liabilities and the sector's credit risk, represented by the ratio of the liquidated loans in the sector to total cash loans used by the sector. Financial ratios and ratio of the credit risk have been received from Central Bank of Rebuplic of Turkey (CBRT), Company Accounts between 1991 and 2015 for the firms, operating in the construction sector. As a result of the causality analysis made, it has been concluded that the credit risk in the construction sector affects the short-term crediting of the firms operating in the construction sector. Due to mentioned conclusion, by evaluating strategies followed by banks for corporate lending, a number of proposals particular to the construction sector, have been developed in order to eliminate the risk of liquidated loans.

Keywords: credit markets, corporate credits, credit risk, construction sector, granger causality