The Effect of Asymmetric Information on Turkish Banking Sector and Credit Markets

Asymmetric information is a factor that decreases the efficiency of markets. The aim of the study is to expose whether asymmetric information causes problems in credit markets. The monthly data between 1986:01–2010:12 is analyzed with the causality tests (Toda ve Yamamoto [1995]) to examine the relationship between the bad credits ratio and total credits ratio. According to the causality tests a unidirectional causality which is explained by the existence of credit rationig problems.