This study analyzes the efficacy of bank lending channel in Turkish setting by using panel econometric techniques over the firm balance sheet data between 1996 and 2015. To this end the study uses a battery of dependent variables, firm-specific variables, and monetary policy indicator. Since the study aims to indicate heterogeneities across firms, it uses a random coefficient model. Thus, this model makes possible the analysis of heterogeneous responses of firms with different scales to monetary policy changes. The set of regressions that incorporate the impact of the changes in monetary policy over external funding choices of firms is designated in accordance with the bank lending channel. Findings of the set of regressions show that monetary policy changes lead manufacturing firms to modify the composition of external financing. Firms rearrange their financing needs across bank credits and other debt instruments by decreasing the proportion of bank loans relative to non-bank debt instruments in both loosening and tightening periods. However, the findings indicate that non-bank debt instruments are not perfect substitutes for bank loans. Thus, empirical findings support the view that bank lending channel works in Turkish case.