As globalization gains momentum, countries are becoming increasingly dependent on each other with the rising growth rate of financial markets. This increasing dependency, however, decreases the efficiency of national economy policies. Since the 1990s, capital has not been devoted to production, but rather toward consumption-based industries. As a result, the global financial crisis in 2008 created many critical social, economic, and environmental problems. Having loans within the root-stock caused by the financial system, the crisis gave rise to drastic changes in three primary areas: 1) a rapid decrease in the prices of basic goods; 2) depreciation of financial assets; and 3) regression in capital flows. The real sector, closely related to the finance sector, was also largely affected by this crisis. The basic macroeconomic indicators, particularly production, employment, and foreign trade, were negatively affected by the crisis in terms of the world and Turkish economies.

Reducing the systemic risk and ensuring financial stability were the most significant topics discussed after the crisis. It was acknowledged that a stabilized price level did not have the required capacity for ensuring the financial stability just by itself. The political practices of the central banks, whose roles on financial stability were questioned following the crisis, experienced certain changes. At this point, macroprudential policies came into prominence, thus contributing to the regulatory and supervision processes of financial institutions. However, having a high number of “means and ends” as a part of this process made it more challenging to comprehend the efficiency of macroprudential political practices.

Since 2010, non-traditional tools of monetary policy have been utilized within the framework of CBRT’s macroprudential policies, thus succeeding in the decrease of negative impacts caused by the crisis. These tools can be can be named as the required reserves, liquidity management, interest rate corridor and reserve options mechanisms in a manner achieving the financial stability target together with the short-term policy interest rate oriented at the inflation target. The subject matter discussed in this study is the impact of the non-traditional monetary policies applied after the 2008 financial crisis in Turkey within the scope of macroprudential policies on certain basic macroeconomic indicators related to their objectives.

The purpose of this study is to analyze the impact of the Central Bank of the Republic of Turkey on macroeconomic monetary policy after the 2008 financial crisis. The study attempted to investigate the dynamic relationship between the policy instruments of the CBRT and the macroeconomic indicators selected in Turkey, using a dataset covering the period from January 2010 to June 2016 and a monthly dataset for VAR analysis. The Augmented Dickey–Fuller (ADF) unit root test, the individual time series properties of the series, “Granger causality,” “variance decomposition,” and “effect–response functions” are aimed to determine the interactions of the series.

Within this context, the impact of monetary policy tools applied by CBRT (the Interest Rates for Borrowing and Lending, Policy Interest, Required Reserve Ratios for TRY and Foreign Currency, and Monthly Repo Interest) on the selected macroeconomic indicators (Inflation/CPI, Total Loan Volume of Turkish Banking Sector, Capital Account Balance, Foreign Trade Balance, Capacity Utilization Ratio for Manufacturing Industry) is discussed and analyzed within an empirical framework with the help of VAR analysis.

According to the results of the implementation, the CBRT’s CPI inflation indicator for price stability and the Capital Movements and Total Credits for Financial Stability indicators were found to be weak against the model’s monetary policy tools. Again, these variables are the most extrinsic variables of the model, responding most to self-induced shocks.

nflation (CPI), as the most affected variable against a single-unit shock by its own dynamics during the first period, has a critical role concerning the change in its own variance. In line with this finding, it can be said that inflation in Turkey reflects an exogenous character. To reduce the sensitivity of inflation to external shocks and permanently recognize it as a non-structural problem, it is particularly required to overcome the problems in the supply front, to reduce foreign dependency in energy and intermediate input, to reduce the unit costs by increasing the production with the help of exportation, and to ensure stability through this process. Furthermore, a change in the reserve requirement of the tools has been shown to have a significant effect on inflation, even partially.

In brief, all variables within the model react more against self-induced shocks, taking the variance separation and action–reaction mechanism into consideration and in accordance with the application results on which the VAR method is applied.

The current studies carried out in CBRT indicate that high volatility in food prices continued between 2010 and 2016. As the country with the highest volatility among all country groups after 2010, Turkey presents a negative disintegration. It is also inevitable that increases in global commodity prices would be reflected on prices in Turkey. Besides the expectations, having higher deviations in terms of an inflation target is a matter of principle that shakes public confidence in politics. It is quite significant for the political authority to have expectations toward inflation and to reduce deviations in terms of the inflation target in order to ensure price stability.

In an environment of increased risk following the 2008 global financial crisis, volatility is experienced in the capital movements affected by external factors. Even if the variation in capital movements is relatively lower as per the analysis results, it is partially affected more by the inflation with respect to the other variables. This result supports the idea of recognizing CBRT financial stability and price stability as an integrated objective. Additionally, it was conferred that the impact of policy interest remained weak on the economic indicators within the model. This situation can be discussed as a result that CBRT has not actively used the policy interest since 2010.

With limited empirical results concerning the efficiency of the tools, it takes time to see the impacts of the current political practices applied by CBRT on macroeconomic variables. Besides, political oppression, which affects macroprudential policies, prevents the mechanism to work effectively. In order for the policies required to be applied independently by the Central Banks to succeed, it is critical for the corporations to have business-to-business cooperation and to follow an active communication policy along with the correct utilization of policy instruments.