Relationship between Financial Development and Economic Growth: Case of Turkey

Nurhan KUŞ and Anıl BÖLÜKOĞLU

Fiscaoeconomia, 2022, issue 2

Abstract: Aim of this study is to analyze the relationship between financial development and economic growth in Turkey by means of three financial development indices that are developed by IMF. In this study, which covers the years 1980-2018 and employs annual data set, the effect of financial development level on per capita output is estimated together with conventional growth factors. The results obtained by ARDL co-integration analysis have showed that financial development is effective on per capita output. It has been revealed that the level of development of financial markets has a positive effect on economic performance, but the effect of development in financial institutions is neutral. Size of the effects was detected quite low compared to traditional indicators. In this context, policy suggestions were made to support the development of financial markets in Turkey.

Keywords: Financial Development; Economic Growth; IMF Financial Development Index; ARDL Bound Test (search for similar items in EconPapers)
JEL-codes: G20 O11 O16 O40 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:fis:journl:220204

DOI: 10.25295/fsecon.1062138

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