Financial Liberalization in Turkey: Why Was the Impact on Growth Limited?

Fatih Ozatay and Güven Sak

Emerging Markets Finance and Trade, 2002, vol. 38, issue 5, 6-22

Abstract: This study shows that the financial reform process, which started in 1980, considerably deepened the financial system. However, the impact of this deepening on credit growth was extremely mild, if not insignificant. We further show that the growth of credit stock, not the deepening of the financial system as measured by the growth of total liabilities of the banking sector, influences economic growth. The reform period can be identified by an increase in the level of riskiness. Without attempting to explain the reasons behind the environment of increased riskiness, we show that the ratio of credit to liabilities was adversely affected by this environment.

Keywords: financial intermediation; financial markets; uncertainty (search for similar items in EconPapers)
Date: 2002
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