The Efficient Utilization of Rediscount Loans is Crucial for the Optimal Distribution of Financial Resources - Central Bank of Turkey Blog Post

In the blog post by the Central Bank of the Republic of Turkey (CBRT), it was emphasized that the efficient utilization of rediscount credits, which serve as an advantageous financing source under market conditions, is crucial for the effective and efficient distribution of financial resources. The article titled "Application of Value-Added Focused Exporter Score in Rediscount Credits," written by CBRT Specialist Fırat Özata and Assistant Experts Muhammed Furkan Erdoğan and Kadir Gürci, was published on the Central Bank's blog.

The article discusses the changes in application regarding the utilization of rediscount credits in recent years and provides information about the exporter score application that will come into effect on January 13, 2025.

It states: "Regular analysis studies are conducted within the CBRT for the efficient use of rediscount credits granted to exporters. In this article, we provide information about the changes in applications regarding the utilization of rediscount credits in recent years and the exporter score application that will be implemented on January 13, 2025.

Significant changes have been made in recent years regarding rediscount credits to increase their effectiveness, contribute more strongly to the current balance, and provide suitable financing conditions to a larger number of SMEs. With the changes made in 2021, the requirement of being a net exporter has become a fundamental criterion in the selection of firms. In addition, daily rediscount credit utilization limits have been gradually increased, making financing opportunities more accessible. The number of firms benefiting from rediscount credits increased from approximately 2,100 in December 2018 to nearly 8,000 by October 2024. The share of SMEs among firms with rediscount balances rose from 38% to 84% during this period.

In recent studies, the CBRT is implementing the exporter score to ensure a more effective distribution of the limited resources provided. The exporter score takes into account the nature of the products produced by firms, the added value they create, their export performances, and their relationships with parent groups, rather than the net exporter condition.

The criteria and weights to be used in the calculation of this score are shown in Table 1. Calculations are made by banks based on the data reported by each firm requesting rediscount credit. Initially, scoring is done according to the threshold values determined by the CBRT for each variable in Table 1. Subsequently, the score obtained from the relevant variable is multiplied by the weight coefficient of that variable to calculate "performance" and "potential" scores. Firms scoring 40 points or above in any score type are classified as having a "high exporter score." Firms scoring below 40 points in both types are classified as having a "low exporter score."

Using the firm data within the CBRT and the method summarized in Table 1, we find that "net exporter" firms possess not only higher performance but also higher potential scores compared to "net importer" firms. Therefore, the purpose of the exporter score application is to enable high-potential exporters to benefit more from rediscount credits instead of low-potential net importer firms. However, net importers with high value-added export potential can also benefit from rediscount credits.

Additionally, we categorize firms with rediscount credit balances into two groups based on their scores: "high exporter score" and "low exporter score" firms. Our analysis shows that firms utilizing rediscount credits with high exporter scores constitute 23% of total exports, while low-scoring firms account for less than 2%. Among high-scoring firms, 41.5% of exports consist of medium-high technology products, whereas this ratio is only 2.7% for low-scoring firms. Furthermore, low-scoring firms are generally net importers, while high-scoring firms are typically net exporters.

In summary, the efficient use of rediscount credits, an advantageous financing source under market conditions, is of utmost importance for the effective and efficient distribution of financial resources. While the new application continues to mostly support net exporter firms, priority is also given to high-tech firms."