A Micro Based Study on Bank Credit and Economic Growth: Manufacturing Sub-Sectors Analysis

Hacievliyagil Nuri () and Eksi Ibrahim Halil ()
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Hacievliyagil Nuri: PhD, Inonu University, Turkey
Eksi Ibrahim Halil: PhD, Assoc. Prof. Gaziantep University, Turkey

South East European Journal of Economics and Business, 2019, vol. 14, issue 1, 72-91

Abstract: This study examines the relationship between bank credits and performance and growth of manufacturing sub-sectors. Industrial Production Index was used for a different approach as a dependent variable. Indications of the autoregressive distributed lag (ARDL) bound co-integration test support the theory that bank credits are more effective than loan rates on industrial production of sub-sectors. Moreover, the increase in bank credit leads to the rise of industrial production in all the sub-sectors, except Machinery. According to the Toda Yomamato causality test results, there are different degrees of causalities in means of the importance of bank loans for industrial production. On the other hand, in all sub-sectors except machinery and chemical sub-sectors, causality relations were observed at different grades beginning from loan interest rates to industrial production. As a result, this study concludes with the evidence of supply leading hypothesis via the financial sector leads and causes economic growth.

Keywords: Economic Growth; Bank Credit; Manufacturing Sector (search for similar items in EconPapers)
JEL-codes: E59 L69 O47 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:seejeb:v:14:y:2019:i:1:p:72-91:n:6

DOI: 10.2478/jeb-2019-0006

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