The Relationship Between Economic Growth and Credit Volume: An Empirical Analysis on Turkey (original) (raw)

An Evaluation Of The Volume Of Loans In The Banking System And Economic Growth In Turkey

Turkish Economy in a New Era: Selected Articles, 2016

Banks have an important place in the financial system. It is important that banks are fulfilling their functions completely for the overall economy of a country to grow. Therefore, it is necessary for realizing the economic growth that the banking system to perform deposit credit flow substantially. The fundamental difference between developed countries and developing countries is the contribution of banking system to the economy of the country. While developed countries have a strong financial system and producing plus value proportional to their economy, fragility of financial system in developing countries cause its contribution to the economy be minimal. Herewith, it is thought that there is a relationship between credit expansion and economic growth. The main aim of this study is to analyze the loans given by the banking system and economic growth in Turkey. In the direction of this main aim, the relationship between total loans and receivables and economic growth is analyzed by Toda-Yamamoto Causality analysis.

The Causality between Financial Development and Economic Growth: The Case of Turkey

Journal of Economic Cooperation and Development, 2014

This study investigates the direction of the causal relationship between the financial development and economic growth in Turkey. The Granger non-causality tests are applied for two different conditions (non-stationary and non-cointegrated variables, and nonstationary and cointegrated variables) using five different proxies for financial development. For the series, which have a unit root and not lead to a cointegrating relationship, the traditional Granger non-causality test is applied in a vector auto regression (VAR) context, after making the non-stationary series stationary. When the variables are non-stationary, integrated of the same order and lead to a cointegrating relationship, Granger non-causality test is applied using the cointegration and the vector error correction methodology (VECM). The empirical findings in the paper suggest that, in the short-run, except for one of the proxies used, causality runs from financial development to economic growth. In the long-run, the test results in the context of VECM for the coefficients of all cointegrated series show a two way causality between financial deepening and economic growth. In the empirical analyses, time-series data was used for the period 1970-2001. * Researcher 2

THE RELATIONSHIP BETWEEN FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH FOR TURKEY

The aim of this study is to clarify the controversial relationship between financial development and economic growth for Turkey. After surveying the related theoretical and empirical literature, the structure and development of the Turkish financial system and economic growth in process of financial integration is examined. To test the relationship between financial development and economic growth, by using quarterly time series data for Turkey between 1988-2012 period, Vector Auto regression Analysis and Granger causality test are applied. The result of the econometric analysis showed that while there is a short run relationship between financial development and economic growth, there is no long run relationship between these variables. Moreover, according to Granger causality test, the direction of causality runs from economic growth to financial development for Turkey.

Financial development and economic growth in Turkey: further evidence on the causality issue

2001

This paper examines the causal relationship between financial development and economic growth in Turkey. Five alternative proxies for financial development are developed and Granger causality tests applied using the cointegration and vector error correction methodology (VECM). The empirical results show that the direction of causality between financial development and economic growth in Turkey is sensitive to the choice of proxy used for financial development. For example, when financial development is measured by the money to income ratio the direction of causality runs from financial development to economic growth, but when the bank deposits, private credit and domestic credit ratios are alternatively used to proxy financial development, growth is found to lead financial development. On balance, however, for Turkey, growth seems to lead financial sector development.

Direction of Causality between Financial Development and Economic Growth in Turkey

Journal of economics, management and trade, 2021

This paper has investigated the causality relationship between financial development and economic growth in Turkey, using data from 2005:04 to 2020:03. We construct a time-series model to explore causality relationships between the variables. In the study, two indicators were used as financial development indicators: banking loans to the private sector and money supply to GDP (Gross Domestic Product). The empirical results have represented a bi-directional relationship between financial development and economic growth in the short run. On the other hand, we have not found a causality relationship in the long term.

Nonlinear Causality Analysis of Finance-Growth Relation: Evidence from Turkey

Journal of Economic Cooperation and Development, 2013

The aim of this study is to examine the causal relation between financial deepening and economic growth by means of Smooth Transition Autoregressive (STAR) model-based Granger causality analysis applied to the monthly data of Turkey over the period 1998M1-2012M3. The results show that non-linear structure of the series should be considered as the evidence from linear and non-linear causality analysis differs. According to non-linear Granger causality analysis, the financial deepening is found to be causing variable for economic growth in Turkey.(ProQuest: ... denotes formulae omitted.)IntroductionThe financial deepening attributed to the development of financial markets has a crucial role in growth process since it provides the efficient allocation of accumulated savings to productive sectors. Though the contribution of finance on economic growth is theoretically postulated, the relation should be examined empirically due to the discrepancies in the regarding literature. According t...

EXAMINING THE ROLE OF CREDIT VOLUME ON ECONOMIC GROWTH: THE CASE OF AZERBAIJAN

37th International Scientific Conference on Economic and Social Development – "Socio Economic Problems of Sustainable Development" - Baku, 14-15 February 2019, 2019

Economic growth in the economy,can be measured by an increase in the amount of production and in national income for goods and services over time. Economic development can be defined as a process of structural change in economic, social, cultural and political areas as well as increase in the production and income in a country. However, it is clearthat, the approaches which increase the quality of life of goods and services only enhance the quality of life. For this reason, examining the economic growth from environmental, social and economic point of view is vital in order to ensure the sustainability of development but this also requires the development of the concept of social and cultural aspects. In this study, the relationship between the domestic credit volume and the gross domestic product in the public and deposit banks were analyzed by using the quarterly data covering the periods of 2006-2017 for Azerbaijan. The reason for selection of 2006-2017 period is to release process of the New Azerbaijani Manat in the Republic of Azerbaijan in 2006. As a result of the analysis, it was concluded that each of them was first-order stationary series and there was no long-run relationship between them. Eventually, the result of Granger causality test which is applied for credit volume and economic growth, has a bidirectional causality relationship between two series.

The Financial Development and Economic Growth Nexus for Turkey

2007

This study investigates the validity of the demand-pulling and the supply-leading hypotheses using annual data from 1968 to 2005. The bounds testing approach to cointegration is conducted to establish the existence of a long-run relationship between financial development and economic growth. An augmented form of Granger causality analysis is implemented to identify the direction of causality among the variables both in the short-run and the long-run. The empirical findings suggest unidirectional causation from financial development to economic growth.

Finance – Growth Nexus: Evidence from Turkey

This paper examines the causal relationship between financial development and economic growth in Turkey for the period 1986:1-2006:4 using dynamic time series models. The results of the cointegration analysis provide evidence of no long-run relationship between financial development and economic growth. Therefore, the empirical investigation is carried out in a vector autoregression (VAR) framework to analyze the short run effect of the financial intermediary development on economic growth. The results show a one-way causal relationship running from the financial development to the economic growth in Turkey.