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Mortgage credit and house prices: the Turkish case

Mortgage credit and house prices: the Turkish case The purpose of this study is to examine whether there is a causal relationship between mortgage credit and house prices in Turkey.Design/methodology/approachGranger causality test, Toda–Yamamoto causality test, Fourier Granger causality test and Fourier Toda–Yamamoto causality tests are applied.FindingsThe findings show that there is a strong one-way causality between mortgage credit and house prices and that the developments in credit markets are more decisive in the relationship between mortgage credit and house prices than the developments in the housing markets.Practical implicationsConsidering a causal relationship between mortgage credit and house prices may contribute to more efficient use of the tools of both macroeconomic and microeconomic policies for the mortgage credit and housing markets in Turkey. Furthermore, by understanding the importance of the direction of causality between both dynamics, it may be possible to prevent and/or mitigate the negative effects of large house price movements on both Turkish housing and mortgage markets as well as on Turkish economy.Originality/valueTo the best of the authors’ knowledge, the contribution of this study is to examine for the first time whether the causal relationship between mortgage credit and house prices in Turkey is mutual as well as to apply four different causality tests and to compare their results for the first time. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Housing Markets and Analysis Emerald Publishing

Mortgage credit and house prices: the Turkish case

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References (67)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1753-8270
eISSN
1753-8270
DOI
10.1108/ijhma-11-2021-0127
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to examine whether there is a causal relationship between mortgage credit and house prices in Turkey.Design/methodology/approachGranger causality test, Toda–Yamamoto causality test, Fourier Granger causality test and Fourier Toda–Yamamoto causality tests are applied.FindingsThe findings show that there is a strong one-way causality between mortgage credit and house prices and that the developments in credit markets are more decisive in the relationship between mortgage credit and house prices than the developments in the housing markets.Practical implicationsConsidering a causal relationship between mortgage credit and house prices may contribute to more efficient use of the tools of both macroeconomic and microeconomic policies for the mortgage credit and housing markets in Turkey. Furthermore, by understanding the importance of the direction of causality between both dynamics, it may be possible to prevent and/or mitigate the negative effects of large house price movements on both Turkish housing and mortgage markets as well as on Turkish economy.Originality/valueTo the best of the authors’ knowledge, the contribution of this study is to examine for the first time whether the causal relationship between mortgage credit and house prices in Turkey is mutual as well as to apply four different causality tests and to compare their results for the first time.

Journal

International Journal of Housing Markets and AnalysisEmerald Publishing

Published: Feb 28, 2023

Keywords: Causality; Mortgage credit; House price; Turkey; Housing; Housing markets; C32; G21; R21

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