International Conference on Eurasian Economies
29-31 August 2016 – Kaposvár, HUNGARY
Paper detail
Paper ID : 1689
Status : Paper published
Language : Turkish
Topic : Macroeconomics
Presenter: Prof. Dr. Muammer Tekeoğlu
Session : 2E Büyüme II
The Relationship between Financial Development and Economic Growth: The Case of Turkey
Ekonomik Büyüme ve Finansal Gelişme İlişkisi: Türkiye Örneği
- Asst. Prof. Dr. Müge Manga (Erzincan Binali Yıldırım University, Türkiye)
- Ph.D. candidate Mehmet Akif Destek (Gaziantep University, Türkiye)
- Prof. Dr. Muammer Tekeoğlu (Çukurova University, Türkiye)
- Prof. Dr. Erkut Düzakın (Çukurova University, Türkiye)
Abstract
The relationship between financial development and economic growth and the direction of causality between them have been received a lot of attention recently by many scholars. It is also important to analyze this relationship and the direction of causality due to implications of policies. In this study the relationship between financial development, trade liberalization and economic growth for Turkey are examined using three different models. Model 1, 2 and 3 investigate the effect of domestic loans to the private sector and trade liberalization on GDP, the impact of the domestic credit provided by banks to the private sector and trade liberalization on GDP and the effect of M2 money supply and M2 trade liberalization on GDP, respectively. Data extracted from World Development Indicators. Autoregressive-Distributed Lag Bound Test (ARDL) is used as a co-integration test to determine the long run relationship between variables. In addition, Toda and Yamamoto (1995) is utilized to test the direction of causality between financial development and economic growth according to the three financial indicators such as domestic loans to the private sector, the domestic credit provided by banks to the private sector and M2 money supply. According to the results there is a unidirectional relationship from economic growth to domestic loans to the private sector and the domestic credit provided by banks to the private sector. Additionally, the results indicate that a bidirectional relationship exist between M2 money supply and economic growth.
JEL codes: E02, E44, O16
Manga, Müge, Destek, Mehmet Akif , Tekeoğlu, Muammer, Düzakın, Erkut (2016). "The Relationship between Financial Development and Economic Growth: The Case of Turkey" in Proceedings of International Conference of Eurasian Economies 2016, pp.814-820, Kaposvár, HUNGARY.
DOI: https://doi.org/10.36880/C07.01689
