House prices and bank loan portfolios in an emerging market: The role of bank ownership

Evidence from developed markets suggests that banks increase their mortgage loans with house price appreciation, but the findings for commercial and consumer are mixed. How do change loan allocation appreciation of prices in an emerging market? Do state-owned behave differently? We answer these questions using province-level data Turkey over 2007Q4–2015Q2 unavailable land share rate as instruments growth. find substitute away industrial to mortgage, consumer, construction appreciate. In addition, misallocate by reducing agricultural lending more than private banks. Our results imply policymakers should consider adverse effects due crowding-out loans, especially