The Growth Effects of Deposit to Loan Conversion in Turkey; Is Consumption Drawn? Is Investment Prompted?

Nesibe DEMIR Bingol, Murat Bingol and Omer Selcuk Emsen

Journal of BRSA Banking and Financial Markets, 2022, vol. 16, issue 1, 27-61

Abstract: In this study, it is aimed to empirically examine the results of the final effect of the conversion rates of deposits, which are the main fund source of the banking sector as is the most widespread financial actor within the financial system in Turkey, to consumer and investment loans on economic growth. In the study, the effects of the conversion rates of consumer and investment loans on economic growth in the conversion of total deposits to total loans during the 2006:Q1-2020:Q4 period in Turkey were examined theoretically with the help of two different models developed by including the banking sector data to the Solow growth model. In the findings obtained from the time series analysis, it has been determined that the consumer loans have negative effects and the investment loans have positive effects on the growth of the Turkish economy. The results show that the credit creation mechanism prioritizing and supporting the consumption as a growth motif in the Turkish economy, does not have positive effects on growth, on the contrary, the short-term revival has negative effects in the long term. The study reveals that it is necessary to operate the mechanisms that will transform from a crediting form prioritizing the consumption to a crediting form prioritizing and encouraging the investment for sustainable economic growth in Turkey where savings are not at a sufficient level.

Keywords: Financial markets; deposits and loans; economic growth; time series analysis. (search for similar items in EconPapers)
JEL-codes: C32 G10 G21 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:bdd:journl:v:16:y:2022:i:1:p:27-61

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