Trade Openness, Financial Development, and Economic Growth in Turkey: Linear and Nonlinear Causality Analysis

Muhsin Kar, Saban Nazlioglu and Huseyin Agir

Journal of BRSA Banking and Financial Markets, 2014, vol. 8, issue 1, 63-86

Abstract: This paper aims at empirically investigating the direction of causality among trade liberalization, financial development, and economic growth in Turkey. By employing monthly data for the period January, 1989- November, 2007, both linear and nonlinear causality approaches indicate that (i) there is bi-directional causality between economic growth and trade openness, (ii) economic growth causes financial development, and (iii) financial development leads to trade liberalization. Thereby, linear and nonlinear approaches confirm strong causal linkages among financial development, trade openness, and economic growth in Turkey. These results partially imply that economic growth depends upon trade liberalization through external finance in Turkey which has been experiencing capital account liberalization since 1989

Keywords: Trade Openness; Financial Development; Economic Growth; Causality; Turkey (search for similar items in EconPapers)
JEL-codes: C19 E44 F41 O43 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:bdd:journl:v:8:y:2014:i:1:p:63-86

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