Tight money steadies the lira, leaving cheques and SME loans to pay

Noise and signal

The headline looks reassuring. Konkordatotakip data cited by CNBC-e show 509 restructuring (konkordato) rulings in October, 9.59% fewer than the 563 in September. The first 10 months of the year produced 4,936 rulings and 249 bankruptcy rulings, and the October bankruptcy count was just 36. The picture invites the conclusion that corporate distress has peaked.

The signal is elsewhere. According to the Risk Centre's September report, 32,702 drawers wrote 257,985 bounced cheques in January–September, worth 270 billion lira. While that value rose 50%, the total value of cheques presented to banks grew by only 20% and the number of cheques fell 4%. Trade is shrinking while the unpaid portion grows; in September the bounce rate reached 3.4% by value.

Where the constraint lies

The constraint is liquidity, not the legal framework. Industrial representatives speaking to Bloomberg HT on 6 November say payment terms have lengthened markedly. They add that a bank's liability of 16,350 lira per cheque leaf is meaningless on large cheques. The head of the TOBB Ready-to-Wear Assembly, by contrast, considers the rules adequate and blames tight liquidity across all sectors. The split matters: even a change in the law would not create cash.

On monetary policy, room for manoeuvre is narrow. The CBRT cut its policy rate from 37% to 36% on 22 October, saying the tight stance would continue until price stability was achieved and that domestic demand was weak. October inflation of 2.58% month on month beat the 2.20% expected, and the annual rate rose to 29.77%, ending a four-month decline. The backward-looking real rate stays above 6 points, which makes faster cuts harder.

Banks are already pricing the risk. BDDK data cited by Bloomberg HT show the non-performing ratio on commercial loans rising to 2.5% on 2 October. That is 1.1 points above the 2024 trough of 1.4%, but below the 10-year average of 3.1%. Weekly data compiled by Evrensel show total non-performing loans up 63.3% since the start of the year to 723.6 billion lira as of 16 October. The increase was 65.13% for SME loans and 65.41% for credit cards.

How the chain unfolds

A bounced cheque does not stay one company's problem. When the supplier who endorsed the cheque cannot pay its own debts, the receivables chain breaks backwards. That is why sectors that work on extended terms, such as textiles, construction and metal products, top the restructuring list. In CNBC-e's sector breakdown, construction leads with 582 filings, followed by textiles with 430 and metal products with 179; the period covered is unclear in the source.

The fall in restructuring rulings does not refute this chain. October still brought 169 new temporary moratorium rulings and 182 rejected applications, and a rejected firm goes into bankruptcy or quiet liquidation. What matters is whether the bounce rate drifts up from 3.4% and whether growth in SME arrears slows. If both accelerate, banks will cut commercial lending and the cost will pass into employment.

Türkiye's dilemma is this: the tight money that protects the currency anchor and disinflation is squeezing domestic demand and corporate cash. With October inflation beating expectations, it will be hard for the CBRT to accelerate cuts on 10 December. Liquidity relief would then slip to the first quarter of 2027, and the post-dated cheque would remain the last source of finance for firms that cannot get credit.

What to watch

The first indicator is the Risk Centre's October cheque report: a bounce rate above 3.4% by value would show the slippage that began in September is continuing. The second is the BDDK weekly bulletin; if non-performing SME loans keep rising by several billion lira a week from 330.75 billion, banks' provisioning burden will grow. The third is November inflation and the 10 December MPC decision: unless monthly inflation falls below 2%, the cut will stay at 100 basis points.

The falsifier is concrete. If the bounce rate falls below 3% in October and November and weekly growth in SME arrears stops, this reading is wrong. In that case the cost of tight money will have proved narrower than feared, and the receivables chain will have absorbed the problem with its own buffers.