The Relationship Between Financial Development and Firm Performance: Sectoral Evidence From Borsa Istanbul

Mert Topcu and Beste Selin Öztekin
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Beste Selin Öztekin: Nevşehir Hacı Bektaş Veli University

Journal of Finance Letters (Maliye ve Finans Yazıları), 2021, vol. 36, issue 116, 37-56

Abstract: This study investigates the relationship between financial development and firm performance in Turkey over the period 1990-2017. To this end, empirical models focus on firms categorized under three sectors to examine the causality nexus between financial development and firm performance using Dumitrescu and Hurlin (2012) heterogeneous panel causality test. Empirical results indicate the common validity of the supply-leading hypothesis for Turkish firms, confirming the response of firm performance to financial development. Sector specific results, on the other hand, reveal that the relationship is volatile across either financial development source or firm performance proxy.

Keywords: Financial development; firm performance; panel causality (search for similar items in EconPapers)
JEL-codes: C23 G34 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:acc:malfin:v:36:y:2021:i:116:p:37-56

DOI: 10.33203/mfy.925683

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