Financial Development and House Prices in Turkey*

M. Ozan Yildirim

A chapter in Contemporary Issues in Social Science, 2021, vol. 106, pp 205-220 from Emerald Group Publishing Limited

Abstract: Introduction: Financial development has a direct impact on the housing market by facilitating access to credit. The increase in housing loans resulting from the relaxation of the credit constraint causes an increase in housing demand and house prices.Purpose: This study aims to examine the relationship between financial development and house prices in Turkey, using the variables: the domestic credit to the private sector and total housing and consumer credits.Methodology: To determine any long-run relationship between financial development and house prices, the autoregressive distributed lag methods are used, covering the selected variables such as real GDP, inflation, mortgage interest rate, and stock price from 2010Q1 to 2020Q2.Findings: The study’s findings show that both variables representing financial development have a statistically significant and substantial positive effect on house prices. Besides, the selected macroeconomic variables have the theoretically expected impact on house prices.

Keywords: financial development; house prices; housing loans; bank credits; Turkey; cointegration; B26; C22; E51; R21; R31 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:csefzz:s1569-375920210000106013

DOI: 10.1108/S1569-375920210000106013

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