Not all credit is created equal: Mortgage vs non-mortgage debt and private saving rate in Turkey

Abstract

The private saving rate in Turkey has decreased substantially since 2000. In this study, we investigate thedeterminants of the private saving rate in Turkey, with a special focus on the role of mortgage debt. WeŞnd a strong and robust negative effect of mortgage credit growth on private saving rate. Non-mortgageconsumer credit growth also has a negative and robust effect on private saving rate, though its effect issmaller than that of mortgage credit. Business credit growth, on the other hand, has a positive impact onprivate saving rate. Our results provide strong support for the argument that the high growth rate ofconsumer credit is a primary reason for the recent decrease in private saving rate in Turkey. We alsoŞndthat private saving rate displays strong persistence, and public saving rate partially crowds out privatesaving rate. In addition, per capita real income growth rate and macroeconomic uncertainty have positiveimpact on private saving rate